fina 4300 test 3new - 1) List seven financial shenanigans...

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1) List seven financial shenanigans that Howard Schilit presents in his book, Financial Shenanigans. 1. Record revenue too soon or of questionable quality 2. Recording bogus revenue 3. Boosting income with one-time gains future services remain to be provided 4. Shifting current expenses to a later or earlier period 5. Failing to record ot improperly reducing liabilities 6. Shifting current revenue to a later period 7. Shifting future expenses to the current period as a special charge.
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2)and 3) Given the information on the following two pages, please answer the following questions: A. How much external financing will Peter’s need to reconcile its income statement and it’s balance sheet? Assuming that external financing is needed, it will be raised with 50% long term debt with ann interest rate of 10% and 50% new common stock. B. Create a 2006 income statement for Peter’s. What is the interest on the New Debt? C. Complete the 2006 Balance Sheet for Peter’s. How much should be added to long term? How much new common stock should be issed? How much are the common stock divdends on the new common stock. Peter’s Pumpernickel and Pistachio Palace 2005 Balance Sheet Cash $20,000 Marketable Securitites 15,000 Accounts Receivable 25,000 Inventory 50,000 Total Current 110,000 Net fixed assets 100,000 Total 210,000 Accounts Payable $10,000 Accruals 10,000 Notes Payable (10%) 20,000 Total Current 40,000 Long-term debt 40,000 Common stock 60,000 Retained Earnings 70,000 Total 210,000 Other selected data 2005 Sales $200,000 2005 Net Income $31,200 2005 Dividend $ 12,480 Schedule of Projected Assumptions For Year Ending 2006 (1) Expected 50% sales increase in 2006 is $100,000
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This note was uploaded on 05/02/2011 for the course FINANCE 4300 taught by Professor Smith during the Winter '11 term at Cumberland County College.

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fina 4300 test 3new - 1) List seven financial shenanigans...

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