FIN500: Principles of Finance

Module 2 Critical Thinking Assignment

Problem 2-1: Preparing Financial Statements

Using the following data:
1. Prepare an income statement in good form

2. Prepare end of year balance sheet in good form

3. Calculate net working capital

4. Calculate the debt ratio

DATA SAR

Depreciation expense 75,000

Cash 250,000

Long-Term Debt 450,000

Net Sales 750,000

Accounts payable 98,000

Marketing and general and administrative expenses 110,000

Buildings and Equipment 950,000

Notes payable 80,000

Accounts receivable 165,000

Interest expense 5,250

Accrued expenses 8,500

Common Stock 350,000

Cost of Goods sold 250,000

Inventory 105,000

Taxes 72,000
Problem 2-2 Preparing Statement of Cash
Flows

Given the following data, prepare a statement of cash flows.

DATA

Increase in accounts receivable 42

Increase in inventories 37

Operating Income 105

Interest Expense 35

Increase in accounts payable 32

Dividends 18

Increase in common stock 23

Increase in net fixed assets 27

Depreciation Expense 14

Income taxes 20