Question #1
A. Using the below account entries, prepare a Balance Sheet (BS) for years 2012 thru 2016:
|
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Accounts Payable
|
$331.00
|
$413.75
|
$517.19
|
$646.48
|
$808.11
|
|
Accounts Receivable
|
$305.00
|
$341.60
|
$382.59
|
$428.50
|
$479.92
|
|
Accrued Liabilities
|
$126.00
|
$133.56
|
$141.57
|
$150.07
|
$159.07
|
|
Cash
|
$327.00
|
$277.95
|
$236.26
|
$200.82
|
$170.70
|
|
Common Stock
|
$228.00
|
$214.32
|
$201.46
|
$189.37
|
$178.01
|
|
Furniture and Fixtures
|
$316.00
|
$322.32
|
$328.77
|
$335.34
|
$342.05
|
|
Inventories
|
$217.00
|
$271.25
|
$339.06
|
$423.83
|
$529.79
|
|
Land/Buildings
|
$2,177.00
|
$2,242.31
|
$2,309.58
|
$2,378.87
|
$2,450.23
|
|
Accumulated Depreciation
|
$2,056.00
|
$2,199.92
|
$2,353.91
|
$2,518.69
|
$2,695.00
|
|
Long-Term Debt
|
$798.00
|
$997.50
|
$1,246.88
|
$1,558.59
|
$1,948.24
|
|
Machinery/Equipment
|
$1,789.00
|
$1,878.45
|
$1,972.37
|
$2,070.99
|
$2,174.54
|
|
Marketable Securities
|
$51.00
|
$54.06
|
$57.30
|
$60.74
|
$64.39
|
|
Notes Payable
|
$101.00
|
$113.12
|
$126.69
|
$141.90
|
$158.93
|
|
Other Fixed Assets
|
$96.00
|
$96.96
|
$97.93
|
$98.91
|
$99.90
|
|
Preferred Stock
|
$109.00
|
$103.55
|
$98.37
|
$93.45
|
$88.78
|
|
Retained Earnings
|
$1,843.00
|
$1,717.38
|
$1,568.45
|
$1,389.30
|
$1,172.19
|
|
Vehicles
|
$314.00
|
$408.20
|
$530.66
|
$689.86
|
$896.82
|
B. Once you have completed your BS in Part A above, convert your BS to a "Common Size BS" for each year (2012 thru 2016)
C. Utilizing the Common Size BS you developed in Part B, identify at least TWO (2) trends that may indicate the company may be struggling
Question #2
The ABC Company produced the following sales. Determine the monthly cash in-flows for January thru June 2016 using the terms of sale:
Cash 60%
Net 30 25%
Net 60 15%
|
|
Jan-16
|
Feb-16
|
Mar-16
|
Apr-16
|
|
Sale
|
$52,152.00
|
$70,405.20
|
$95,047.02
|
$128,313.48
|
Question #3
ABC Company accountants generated the following data. Prepare an Income Statement (IS) for years 2012 thru 2016:
|
|
2012
|
2013
|
2014
|
2015
|
2016
|
|
Cost of Goods Sold (COGS)
|
$1,999.00
|
$2,398.80
|
$2,878.56
|
$3,454.27
|
$4,145.13
|
|
Depreciation Expense
|
$223.00
|
$245.30
|
$269.83
|
$296.81
|
$326.49
|
|
General &Administrative Expense
|
$187.00
|
$192.61
|
$198.39
|
$204.34
|
$210.47
|
|
Interest Expense
|
$91.00
|
$91.00
|
$91.00
|
$91.00
|
$91.00
|
|
Lease Expense
|
$45.00
|
$45.00
|
$45.00
|
$45.00
|
$45.00
|
|
Preferred Stock Dividends
|
$10.00
|
$10.00
|
$10.00
|
$10.00
|
$10.00
|
|
Sales Revenues
|
$3,529.00
|
$3,881.90
|
$4,270.09
|
$4,697.10
|
$5,166.81
|
|
Selling Expense
|
$108.00
|
$124.20
|
$142.83
|
$164.25
|
$188.89
|
|
Taxes (29%)
|
$254.00
|
$228.00
|
$187.00
|
$128.00
|
$46.00
|
Question #4
As part of the initial outlays to get the ABC Company up &running, they needed to purchase $625,000 in equipment. It also cost $12,356 for delivery of the equipment and $62,644 in installation costs.
A. Develop a depreciation table for the asset(s)utilizing the 7-year MACRS schedule found in Table A-1 of IRS Pub 946:
B. What is the "Book Value" of the asset(s) at the end of year 5?
C. If ABC Company decides to sell the assets for $207,828.10 at the end of year eight (8), how much taxes would ABC Company have to pay as a result of this transaction?
Assumptions:
o ABC Company breaks-even that year (realizing a profit of $0) before the sale (so the tax paid by ABC will be a result of this sale only)
o Capital Gains Tax Rate is 15%
o Ordinary Tax Rate is 29%
Question #5
You are the owner of a small business. An opportunity to expand into a new market niche arose. It requires an initial equipment investment of $500,000. You will finance the entire amount with a 5-year payback at 8% interest rate (annual payments).
Depreciation will follow MACRS-3
Sales projections look very promising as shown below:
- $250,000 in first year's projected sales
- Sales growth is expected to increase by 35% over the previous year's sales
- COGS is expected to be 25% of that years' sales
Business ordinary tax rate is 29%
A. Develop the following:
a. Loan amortization table
b. Depreciation table
c. Income Statement
d. Cash Flow Statement
B. Based on the information provided inthe statements, would you pursue the opportunity? In ~50 words, explain why or why not.