Notes for Exam 2

Notes for Exam 2 - Corporate F inancial Statements Review...

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Corporate Financial Statements Review Financial Statements Cash Flow Statement
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C lass Example P roblem #1 : Using the B alance S heet The following balance sheets are for Viking Company as of December 31 of the years indicated: Year 2 Year 1 Cash $ 1,760 $ 1,526 Marketable securities 1,280 1,620 Accounts receivable 5,240 5,050 Merchandise inventory 6,480 6,320 Property, plant, and equip (net) 12,240 12,084 Total assets $ 27,000 $ 26,600 Current liabilities $ 7,800 $ 8,300 Long-term liabilities 268 2,020 Common stock 8,000 8,000 Retained earnings 10,932 8,280 $ 27,000 $ 26,600 Each year, the company paid dividends of $3,000. Net income was as follows: Year 1 $5,280 Year 2 $5,652 Determine the following for Year 2: working capital, current ratio, acid test ratio, debt to equity ratio, debit to total asset ratio, and return on stockholders’ equity.
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Service Companies: Merchandising companies: Manufacturing companies: What is inventory and what do we need to know about it?
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Common accounts used by a merchandising company: Sales Revenue (or Sales) Sales discounts Sales returns and allowances Inventory Purchases Purchase returns Purchase discounts Freight in Cost of Goods Sold Inventory and the matching principle –
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Periodic vs. Perpetual Inventory Systems Perpetual method – amount of expense is calculated continuously throughout the accounting period Periodic method – amount of expense is determined at end of accounting period INCOME STATEMENT FOR A MERCHANDISING COMPANY Net Sales - Cost of goods sold Gross profit - Expenses Net income Formula used to c alculat e Cost of G oods S old Beginning inventory + Net purchases Goods available for sale
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- Ending inventory Cost of goods sold
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Example problem: Income Statement for a merchandising company SES Company has the following account balances as of December 31, X6: Purchase returns and allowances $ 20 Inventory, January 1 200 Sales 400 Freight - In 50 Sales returns and allowances 25 Purchase discounts 40 Inventory, December 31 190 Purchases 150 Sales Discounts 60 Selling and administrative costs 45 Freight out 10 General expenses 12 Required: Determine the gross profit and net income of SES Company.
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This note was uploaded on 02/28/2011 for the course ANTH 202 taught by Professor Staff during the Fall '08 term at Texas A&M.

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Notes for Exam 2 - Corporate F inancial Statements Review...

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