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i need ur help to solve #4,5,8 and 10
HW.pdf

UNITED ARAB EMIRATES UNIVERSITY
College of Business and Economics
Department of Economics and Finance

Principles of Financial Management FINC 240
Homework Chapter 3
Spring 2012
Task 1
Using the information provided, calculate net income for 2009. Assume a tax rate of
40%.
Inventory
Revenues
Depreciation expense
Cost of goods sold
Interest expense
Operating expenses

$5,000
200,000
5,000
100,000
10,000
30,000

Task 2
Financial Data for Dooley Sportswear, December 31, 2010
Inventory
206,250
Long-term debt
300,000
Interest expense
5,000
Accumulated depreciation
442,500
Cash
180,000
Net sales (all credit)
1,500,000
Common stock
800,000
Accounts receivable
225,000
Operating expenses
525,000
Notes payable-current
187,500
Cost of goods sold
937,500
Plant and equipment
1,312,500
Page 1 of 4

UNITED ARAB EMIRATES UNIVERSITY
College of Business and Economics
Department of Economics and Finance

Accounts payable
Marketable securities
Prepaid insurance
Accruals
Retained earnings-current-year
Federal income taxes

168,750
95,000
80,000
65,000
?
5,750

From the scrambled list of items presented in the table above, prepare an income
statement and a balance sheet for Dooley Sportswear Company.
Task 3
Your firm has the following balance sheet statement items: total current liabilities of
$805,000; total assets of $2,655,000; fixed and other assets of $1,770,000; and long-term
debt of $200,000. What is the amount of the firm's total current assets?
Task 4
Grass Gadgets had sales of $30 million and net income of $2 million in 2008. Grass paid
a dividend of $1.5 million. Assuming that their beginning balance for retained earnings
was $3 million, calculate their ending balance for retained earnings.
Task 5
Your firm has the following balance sheet statement items: total current liabilities of
$805,000; total assets of $2,655,000; fixed and other assets of $1,770,000; and long-term
debt of $200,000. What is the amount of the firm's net working capital? Interpret the
result.
Task 6
Your firm has the following balance sheet statement items: total current liabilities of
$805,000; total assets of $2,655,000; fixed and other assets of $1,770,000; and long-term
debt of $200,000. What is the amount of the firm's total current assets?
Page 2 of 4

UNITED ARAB EMIRATES UNIVERSITY
College of Business and Economics
Department of Economics and Finance

Task 7
Based on the following selected financial information for Sheets Metalworks, calculate
net income for 2010.
2009
2010
Dividends paid
400
700
Accts. payable / accr.
300
500
Long-term debt
2,300
2,000
Common stock
2,200
3,000
Retained earnings
6,150
6,350
Task 8
Snark Enterprises, Inc.Balance Sheets

Cash
Accounts receivable
Inventories
Land
Other fixed assets
Accumulated depreciation
Total assets
Accounts payable
Bonds
Common stock
Retained earnings
Total debt and equity

Page 3 of 4

2008
1,000
8,000
4,000
10,000
5,000
(1,600)
26,400
4,200
4,000
15,000
3,200
26,400

2009
?
9,000
7,000
10,000
5,500
(2,000)
?
7,000
4,000
16,000
3,800
?

UNITED ARAB EMIRATES UNIVERSITY
College of Business and Economics
Department of Economics and Finance

Snark Enterprises, Inc.Income Statement
Sales
Cost of goods sold
Gross profit
Operating expenses
Depreciation
Net operation income
Interest expense
EBT
Taxes
Net income

44,900
(22,000)
12,900
(10,000)
(10,000)
2,500
(500)
2,000
(1,000)
1,000

Based on the information above, what was the total amount of Snark Enterprise's
common stock dividend for 2009?
Task 9
Pearls, Inc. had sales in 1993 of $2.1 million. The common stockholders received
$400,000 in cash dividends and preferred stockholders were paid $200,000. Interest
totaling $150,000 was paid on outstanding debts. Operating expenses totaled $300,000,
and cost of goods sold was $500,000. Stock that had been purchased for $50,000 in 1987
was sold for $70,000. What is the tax liability of Pearls, Inc.?

Task 10
Goodwin Enterprises had a gross profit of $2,500,000 for the year. Operating expenses
and interest expense incurred in that same year were $595,000 and $362,000,
respectively. Goodwin had 200,000 shares of common stock and 180,000 shares of
preferred stock outstanding. Management declared a $2.50 dividend per share on the
common and a $1.50 dividend per share on the preferred. Securities purchased at a
cost of $37,500 in a previous year were resold at a price of $50,500. Compute the
taxable income and the resulting tax liability for Goodwin Enterprises for the year.
Page 4 of 4

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