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a.
To compute: The income statement and
Introduction: Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to compute the net income for a particular period.
a.
Explanation of Solution
The income statement for the company has been prepared:
Working note: Preparation of income statement and computation of net income has been shown below:
The balance sheet for the company has been prepared:
Working note: Preparation of balance sheet has been shown below:
b.
To compute: Create a statement of cash flows for 2016.
Introduction: A cash flow statement shows the aggregate data regarding all the
b.
Explanation of Solution
The cash flow statement for the company has been prepared:
Working note: Preparation of cash flow statement and computation of net cash flow has been shown below:
c.
To show: Cash flow statement using outline feature.
Introduction: A cash flow statement shows the aggregate data regarding all the cash inflows and outflows of a company. It considers only cash transactions, any non-cash transaction is mentioned as a footnote.
c.
Explanation of Solution
Cash flow statement can be shown using outline feature as:
Steps to perform outline:
- Select the entire particulars column.
- Go to ‘Data’ tab.
- Click on sub-total.
- Select ‘Count’ as ‘Use function’.
- Click on ok.
Working note: The cash flow statement for the company has been prepared.
d.
To compute: If sales were $400000 instead of $3,69,300 in 2016 then compute the net income &
Introduction: Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to compute the net income for a particular period.
d.
Explanation of Solution
The revised net income could be calculated by changing the net sales figure for 2016:
Retained earnings would change automatically as shown below:
Working notes:
Calculation of net income:
Computation of retained earnings:
If sales were $400000 instead of $3,69,300 in 2016 then net income is $33,405& retained earnings is $68,605.
e.
To compute: If tax rate was 35% instead of 40% in 2016 then compute the net income & retained earnings.
Introduction: Income Statement’ shows the revenue earned and expenses incurred over a period of time. It is used to compute the net income for a particular period.
e.
Explanation of Solution
The revised net income could be calculated by changing tax rate figure for 2016:
Calculated revised retained earnings:
Computation of revised net income:
Computation of retained earnings:
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Chapter 2 Solutions
EBK 3N3-EBK: FINANCIAL ANALYSIS WITH MI
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