100038050_HW2 - Problem 21 pg 84 Data TAI PO STATIONERS...

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Problem 21, pg 84 Data TAI PO STATIONERS 2006 Income Statement Sales HKD 905,000 Costs 710,000 Other Expenses 12,000 Earnings before interest and taxes HKD 183,000 Interest paid 19,700 Taxable income HKD 163,300 Taxes (35%) 57,155 Net income HKD 106,145 Dividents HKD 42,458 Addition to retained earnings 63,687 TAI PO STATIONERS Balance Sheet as of December 31, 2006 Assets Liabilities and Owner's Equity Current assets Current liabilities Cash HKD 25,000 Accounts payable Accounts receivable 43,000 Notes payable Inventory 76,000 Total Total HKD 144,000 Long-term debt Fixed assets Owners' equity Net plant and equipment HKD 364,000 Common stock and paid in surplus Retained Earnings Total Total assets HKD 508,000 Total liabilities and owners' equity Solution EFN = Assets/Sales * ∆Sales - Spontaneous liabilities/Sales * ∆Sales - PM * Projected Sales * (1 - d) = ∆Sales = 1,086,000 - 905,000 = 181,000 (1.2 * 905,000 = 1,086,000) PM = 106,145/905,000 = 0.117 d = 42,458/106,145 = 0.4 TAI PO STATIONERS Common-Size Income Statement 2006 Sales 100.0% Costs 78.5% Other Expenses 1.3% Earnings before interest and taxes 20.2% Interest paid 2.2% Taxable income 18.0% Taxes (35%) 6.3% Net income 11.7%
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Dividents HKD 4.7% Addition to retained earnings 7.0% TAI PO STATIONERS Common-Size Balance Sheet as of December 31, 2006
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