AFA 100 Lecture Notes - Lecture 8: Cash Flow, Gross Profit, Interest Expense
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Lansing Companyâs 2015 income statement and selected balancesheet data (for current assets and current liabilities) at December31, 2014 and 2015, follow. |
LANSING COMPANY Income Statement For Year Ended December 31, 2015 | ||||||
Sales revenue | $ | 62,200 | ||||
Expenses | ||||||
Cost of goods sold | 21,000 | |||||
Depreciation expense | 4,500 | |||||
Salaries expense | 10,000 | |||||
Rent expense | 3,000 | |||||
Insurance expense | 1,700 | |||||
Interest expense | 1,800 | |||||
Utilities expense | 1,500 | |||||
Net income | $ | 18,700 | ||||
LANSING COMPANY Selected Balance Sheet Accounts | ||||||
At December 31 | 2015 | 2014 | ||||
Accounts receivable | $360 | $371 | ||||
Inventory | 96 | 75 | ||||
Accounts payable | 123 | 130 | ||||
Salaries payable | 47 | 39 | ||||
Utilities payable | 13 | 10 | ||||
Prepaid insurance | 10 | 11 | ||||
Prepaid rent | 13 | 11 | ||||
Required: | |||||||||||||||||||||||||||||||||||
Prepare the cash flows from operating activities section only ofthe companyâs 2015 statement of cash flows using the directmethod. (Amounts to be deducted should be indicatedwith a minus sign.)
PLEASE CALCUALATE EACH ACTIVITIES |
Financial Information for Case9-1 | |||
Industy Wide | |||
Balance Sheets | |||
Years Ended December 31, 2014and 2015 | |||
2015 | 2014 | ||
Assets | |||
Current Assets: | |||
Cash | $ 30,000 | $ 25,000 | |
Accounts receivable | 110,000 | 90,000 | |
Inventories | 100,000 | 80,000 | |
Total Current Assets | 240,000 | 195,000 | |
Fixed Assets; | |||
Plant and equipment | 250,000 | 220,000 | |
Less accumulated depreciation | (100,000) | (65,000) | |
Land | 50,000 | 50,000 | |
Total Fixed Assets | 200,000 | 205,000 | |
Total Assets | $ 440,000 | $ 400,000 | |
Liabilities and Equity | |||
Current Liabilities: | |||
Accounts payable | $ 58,000 | $ 50,000 | |
Notes payable-due within one year | 50,000 | 50,000 | |
Accrued liabilities | - | - | |
Total Current Liabilities | 108,000 | 100,000 | |
Long Term Liabilities | 32,000 | 20,000 | |
Total Liabilities | 140,000 | 120,000 | |
Stockholders' Equity: | |||
Common stock | 100,000 | 100,000 | |
Retained earnings | 200,000 | 180,000 | |
Total Stockholders' Equity | 300,000 | 280,000 | |
Total Liabilities and Equty | $ 440,000 | $ 400,000 | |
Industry Wide | |||
Income Statement | |||
Years Ended December 31, 2014and 2015 | |||
Revenues | $ 1,100,000 | $ 1,000,000 | |
Cost of goods sold | (700,000) | (650,000) | |
Gross margin | 400,000 | 350,000 | |
Operating expenses | (275,000) | (255,000) | |
Operating income | 125,000 | 95,000 | |
Interest expense | (15,000) | (15,000) | |
Income before taxes | 110,000 | 80,000 | |
Income taxes | (44,000) | (32,000) | |
Net income | $ 66,000 | $ 48,000 | |
Financial Information for Case9-1 | |||
Industy Wide | |||
Balance Sheets | |||
Years Ended December 31, 2014and 2015 | |||
2015 | 2014 | ||
Assets | |||
Current Assets: | |||
Cash | $ 30,000 | $ 25,000 | |
Accounts receivable | 110,000 | 90,000 | |
Inventories | 100,000 | 80,000 | |
Total Current Assets | 240,000 | 195,000 | |
Fixed Assets; | |||
Plant and equipment | 250,000 | 220,000 | |
Less accumulated depreciation | (100,000) | (65,000) | |
Land | 50,000 | 50,000 | |
Total Fixed Assets | 200,000 | 205,000 | |
Total Assets | $ 440,000 | $ 400,000 | |
Liabilities and Equity | |||
Current Liabilities: | |||
Accounts payable | $ 58,000 | $ 50,000 | |
Notes payable-due within one year | 50,000 | 50,000 | |
Accrued liabilities | - | - | |
Total Current Liabilities | 108,000 | 100,000 | |
Long Term Liabilities | 32,000 | 20,000 | |
Total Liabilities | 140,000 | 120,000 | |
Stockholders' Equity: | |||
Common stock | 100,000 | 100,000 | |
Retained earnings | 200,000 | 180,000 | |
Total Stockholders' Equity | 300,000 | 280,000 | |
Total Liabilities and Equty | $ 440,000 | $ 400,000 | |
Industry Wide | |||
Income Statement | |||
Years Ended December 31, 2014and 2015 | |||
Revenues | $ 1,100,000 | $ 1,000,000 | |
Cost of goods sold | (700,000) | (650,000) | |
Gross margin | 400,000 | 350,000 | |
Operating expenses | (275,000) | (255,000) | |
Operating income | 125,000 | 95,000 | |
Interest expense | (15,000) | (15,000) | |
Income before taxes | 110,000 | 80,000 | |
Income taxes | (44,000) | (32,000) | |
Net income | $ 66,000 | $ 48,000 |
1. Calculate the current ratio and average collection period foraccounts receivable, inventory turnover, gross margin percentage,and return on equity for 2014 and 2015 for the JordanCorporation.
2. Calculate the current ratio and average collection period foraccounts receivable, inventory turnover, gross margin percentage,and return on equity for the Industry.
3. Compare the performance of the Jordan Corporation between2014 and 2015 and comment on the trend of each ratio.
4. Compare the performance of the Jordan Corporation in 2015 tothe industry averages and comment on each.
Devin E Corporation | |||
Balance Sheet | |||
As of December 31, | |||
2015 | 2014 | ||
Assets: | |||
Cash & Cash Equivalents | $41,900 | $25,000 | |
Accounts Receivable | 24,000 | 6,250 | |
Inventory | 30,000 | 36,000 | |
CurrentAssets | 95,900 | 67,250 | |
Land | 25,000 | 10,000 | |
Equipment | 42,000 | 38,500 | |
Less: Accumulated Depreciation | (14,000) | (7,000) | |
53,000 | 41,500 | ||
Total Assets | 148,900 | 108,750 | |
Liabilities: | |||
Accounts Payable | 17,500 | 22,500 | |
Accrued Salaries Payable | 5,500 | 8,000 | |
Rent Expense Payable | 2,200 | 1,000 | |
Income Tax Payable | 6,900 | 4,000 | |
Current Liabilities | 32,100 | 35,500 | |
Long-term notes payable | 50,000 | 30,000 | |
Total Liabilities | 82,100 | 65,500 | |
Stockholders Equity: | |||
Common Stock | 42,000 | 30,000 | |
Retained Earnings | 24,800 | 13,250 | |
Total Liabilities & StockholdersEquity | $148,900 | $108,750 | |
Devin E Corporation | |||
Income Statement | |||
For the Year Ended December 31, 2015 | |||
2015 | |||
Revenues | $147,000 | ||
Cost of Goods Sold | 84,000 | ||
Gross Profit | 63,000 | ||
Operating Expenses | |||
Depreciation Expense | 7,000 | ||
Salary Expense | 14,600 | ||
Insurance Expense | 2,500 | ||
Rent Expense | 10,000 | ||
Interest Expense | 4,200 | ||
Total OperatingExpenses | 38,300 | ||
Income from Operations | 24,700 | ||
Income Tax Expense | 6,900 | ||
Net Income | $17,800 | ||
Devin E Corporation (theâCompanyâ) manufactures food processing equipment. Use DevinCorporationâs 2015 and 2014 balance sheets and 2015 incomestatement shown below to prepare a statement of cash flows for2015. Note that the Company paid dividends of $6,250 during2015. |
Please fill in the balance sheet as well as create a statementof cash flow sheet
Devin E Corporation | ||||||||
Balance Sheet | ||||||||
31-Dec | ||||||||
Worksheet for Cash Flow | ||||||||
2015 | 2014 | Change | Cash | Operating | Investing | Financing | ||
Cash and Cash Equivalents | ||||||||
Accounts Receivable | ||||||||
Inventory | ||||||||
Land | ||||||||
Equipment | ||||||||
Accumulated Depreciation | ||||||||
Accounts Payable | ||||||||
Accrued Salaries Payable | ||||||||
Rent Expense Payable | ||||||||
Income Tax Payable | ||||||||
Long-term Note Payable | ||||||||
Common Stock | ||||||||
Retained Earnings | ||||||||
Devin E Corporation | ||
Statement of Cash Flows | ||
For the Year Ended December 31, 2015 | ||