Jenga Inc Solution Strictly Confidential

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Jenga Inc Solution Year 1 Year 2
Jenga Inc engages in the following transactions:

Issues common shares 1,000

Borrows 400
Repays loan 100
Pays interest 24 18

Buys property and plant (estimated useful life is 10 years) 900

Buys inventory 350 400

Cash paid for inventory 320 380

Sells inventory 510 550

Cash received from sales 430 480

Inventory left at year end 60 80

Pays expenses 40 50
Pays tax at 30% 19.8 3.6
Pays a dividend 30 5

Requirements:

1. Produce a balance sheet and income statement for Jenga Inc for Years 1 and 2.

2. Produce the financial statements for Year 2.

Income Statement
Revenues 510 550
Cost of sales (290) (380)
Gross profit 220 170

Expenses (40) (50)

Depreciation (90) (90)
Operating profit (EBIT) 90 30

Finance costs (24) (18)

Profit before taxes 66 12

Tax at 30% (19.8) (3.6)

Net income 46 8
Dividend (30) (5)
Retained earnings 16.2 3.4

Balance Sheet
Assets
Current assets:
Cash 496.2 419.6
Receivables 80 150
Inventory 60 80
Other
Total current assets 636.2 649.6

Non-current assets
Property, plant and equipment 810 720
Other
Total assets 1,446.2 1,369.6

Liabilities and shareholders' equity

Current liabilities:
Accounts payable 30 50

Non-current liabilities:
Long term borrowing 400 300

Shareholder's equity:
Common shares 1,000 1,000
Retained earnings 16.2 19.6
Total liabilities and shareholders' equity 1,446.2 1,369.6

Balance Sheet Check 0.0 0.0