Practice Exercise - Cobble Hill Part 1 Strictly Confidential

Table of Contents

Cobble Hill Financial Statements

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Construct Financial Statements for Cobble Hill Inc.

Produce a Balance Sheet and Income Statement for Cobble Inc. for Year 1

Transactions

YEAR 1

Issues common shares 1,000

Borrows 400
Repays loan
Pays interest 24

Buys property and plant 900

(10 year estimated useful life)

Buys inventory 350

Cash paid for inventory 320

Sells inventory 510

Cash received from sales 430

Inventory left at year end 60

Pays expenses 40
Pays tax at 30% 20
Pays a dividend 30

Practice Exercise - Cobble Hill Part 1 Page 3 of 5

Balance Sheet

ASSETS YEAR 1

Current Assets
Cash 496
Accounts Receivable 80
Inventory 60
Total Current Assets 636

Non-Current Assets
Property, Plant & Equipment 810
Total Non-Current Assets 810

Total Assets 1,446

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities
Accounts Payable 30
Total Current Liabilties 30

Non-Current Liabilities
Long-Term Debt 400
Total Non-Current Liabilities 400

Shareholders' Equity
Common Shares 1,000
Retained Earnings 16
Total Shareholders' Equity 1,016

Total Liabilities & Equity 1,446

Total Assets 1,446

Total Liabilities & Equity 1,446
Difference (0)

Practice Exercise - Cobble Hill Part 1 Page 4 of 5

Income Statement

YEAR 1

Revenues 510
Cost of Sales (290)
Gross Profit 220

Other Operating Expenses (40)

EBITDA 180

Depreciation (90)
Operating Profit (EBIT) 90

Interest Expenses (Finance Cost) (24)

Profit Before Tax (EBT) 66

Tax Expense at 30% (20)

Net Income (EAT) 46

Dividends (30)
Retained Earnings 16

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