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Ch002 - Chapter 2 Accounting Statements and Cash Flow 2.1...

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Chapter 2: Accounting Statements and Cash Flow 2.1 Following the example in Table 2.1: Assets Current assets Cash $4,000 Accounts receivable 8,000 Total current assets $12,000 Fixed assets Machinery $34,000 Patents 82,000 Total fixed assets $116,000 Total assets $128,000 Liabilities and equity Current liabilities Accounts payable $6,000 Taxes payable 2,000 Total current liabilities $8,000 Long-term liabilities Bonds payable $7,000 Stockholders equity Common stock* $88,000 Capital surplus 19,000 Retained earnings 6,000 Total stockholders equity $113,000 Total liabilities and equity $128,000 * You can back this out knowing that Total Assets = Total Liabilities + Equity 2.2 One year ago Changes Today Long-term debt $50,000,000 none $50,000,000 Preferred stock 30,000,000 none 30,000,000 Common stock 100,000,000 10 million new issue 110,000,000 Retained earnings 20,000,000 5 million net income less 3 million paid out dvds 22,000,000 Total $200,000,000 $212,000,000 B-41
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2.3 Following the example in Table 2.2: Income Statement Total operating revenues 500000 Cost of goods sold (200000) Administrative expenses (100000) (300000) Earnings before interest and taxes (EBIT) 200000 Interest expense (50000) Earnings before Taxes 150000 Taxes (51000) (Taxes = 150,000 x .34)
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