Understanding Financial Statements, Cash Flows and Taxes
*Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit; no hard keys.
Problem 2-1: Preparing Financial Statements
Information below is for Warner Manufacturing, Inc. for the year ended December 31, 20×1 except where beginning of year numbers indicated. All amounts in SAR unless otherwise stated.
Using the information below:
1. Prepare an income statement with the proper title
2. Prepare end of year balance sheet with the proper title
3. Calculate net working capital
4. Calculate the debt ratio
*Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit; no hard keys.
DATA
Depreciation expense
66,000
Cash
220,000
Long-Term Debt
330,000
Net Sales
615,000
Accounts payable
102,000
Marketing and general and administrative expenses
79,000
Buildings and Equipment
895,000
Notes payable
7,5000
Accounts receivable
156,000
Interest expense
4,750
Accrued expenses
7,900
Common Stock
289,000
Cost of Goods sold
297,000
Inventory
99,300
Taxes
67,300
Accumulated Depreciation
-26,3000
Prepaid expenses
14,500
Taxes payable
55,000
Retained earnings
262,900
Problem 2-2 Preparing Statement of Cash Flows
Given the following information, prepare a statement of cash flows.
DATA
Increase in accounts receivable
30
Increase in inventories
30
Operating Income
95
Interest Expense
30
Increase in accounts payable
25
Dividends
15
Increase in common stock
20
Increase in net fixed assets
23
Depreciation Expense
12
Income taxes
17
Beginning cash
20
Assume all amounts are in 000’s SAR.
