Problem Set #2: Chemalite Case

1. Record the effects of Chemalites 1991 events on the BSE worksheet

Cash Flow type (O, I, F)
Event Cash
A/R
375,000
F P1
(7,500)
I P2
(62,500)
I P3
(75,000)
O P4
230,000
-

O
O
O
O
O
O
I
F

T1
T2
T3
T4
T5.1
T5.2
T6
T7.1
T7.2
O1
O2
O3
O4
O5
Total

(23,750)
685,000 69,500
(175,000)
(22,500)
(350,000)
(80,000)
(150,000)
50,000
(50,750)

Inventory

75,000
75,000

Patent
Cap. Exp. PPE
125,000
7,500
62,500
125,000

7,500

Notes Pay

62,500

Paid in Capital RE
500,000

500,000

Balance Sheet

175,000
(22,500) Adv. Expense
350,000
(80,000) Admin Expenses
150,000

50,000
(50,000)

O (750)
(545,000)
(25,000)
(10,625)

(25,000)
(10,625)

69,500

(23,750) R&D Expense

754,500 Revenue

(545,000)

113,000

RE Explanation

55,000

100,000

7,500

201,875

500,000

Interest Expense
Inv. Adjustment
Amort. Expense
Depr. Expense

46,875 Balance Sheet

15.515 Fall 2003

Session 1

Problem Set #2: Chemalite Case

3. Balance Sheet (6/31/91):
Assets
Cash
Accounts Receivable
Inventories
Total Current Assets
Property, Plant, & Equipment
Other (Capitalized Start-up Expenses)
Patent
Total Assets
Liabilities and Stockholders' Equity
Common Stock
Retained earnings
Total Liabilities and SE

230,000
75,000
305,000
62,500
7,500
125,000
500,000

500,000
500,000
15.515 Fall 2003
Session 1

Problem Set #2: Chemalite Case

3. Income Statement (For 6 months June 30, 1991):
Revenue
Costs and Expenses
Advertising
Administration
Manufacturing costs
Raw materials
R&D
Interest
Depreciation
Amortization of patent

Net Income

15.515 Fall 2003

Session 1

Problem Set #2: Chemalite Case

3. Direct Statement of Cash Flows (6 months ended June 30, 1991):
Cash provided (used) by operating activities
Received from customers
Paid for inventory
Paid for advertising
Paid for manufacturing costs
Paid for administration
Paid for interest
Paid for R&D expenses

(75,000)
(75,000)

Cash provided (used) by investing activities

Start-up expenses
Purchase of PP&E

(7,500)
(62,500)
(70,000)

Cash provided (used) by financing activities

Cash from stock issuance

375,000
375,000

Increase (decrease) in cash balance

Beginning cash balance
Ending cash balance

230,000
230,000
15.515 Fall 2003
Session 1

Problem Set #2: Chemalite Case

3. Balance Sheet (December 31, 1991):
Assets
Cash
Accounts Receivable
Inventories
Total Current Assets
Property, Plant, & Equipment
Other (Capitalized Start-up Expenses)
Patent
Total Assets
Liabilities and Stockholders' Equity
Common Stock
Retained earnings
Total Liabilities and SE

113,000
69,500
55,000
237,500
201,875
7,500
100,000
546,875

500,000
46,875
546,875
15.515 Fall 2003
Session 1

Problem Set #2: Chemalite Case

3. Income Statement (Six months ended December 31, 1991):
Revenue
Costs and Expenses
Advertising
Administration
Manufacturing costs
Raw materials
R&D
Interest
Depreciation
Amortization of patent

754,500

22,500
80,000
350,000
195,000
23,750
750
10,625
25,000
707,625

Net Income

46,875
15.515 Fall 2003
Session 1

Problem Set #2: Chemalite Case

3. Direct Statement of Cash Flows (For 6 months ended Dec. 31, 1991):
Cash provided (used) by operating activities
Received from customers
Paid for inventory
Paid for advertising
Paid for manufacturing costs
Paid for administration
Paid for interest
Paid for R&D expenses

685,000
(175,000)
(22,500)
(350,000)
(80,000)
(750)
(23,750)
33,000

Cash provided (used) by investing activities

Start-up expenses
Purchase of PP&E

(150,000)
(150,000)

Cash provided (used) by financing activities

Cash from stock issuance

Increase (decrease) in cash balance

Beginning cash balance
Ending cash balance

(117,000)
230,000
113,000
15.515 Fall 2003
Session 1