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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 FINANCIAL ANALYSIS WITH MICROSOFT E
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- Use a spreadsheet and the following financial information from Mineola Companys financial statements to build a template that automatically calculates the net operating cash flow. It should be suitable for use in preparing the operating section of the statement of cash flows (indirect method) for the year 2018.arrow_forwardwhat are the three sections for debits, credits, and total. Here is a picture with an empy cells for what it should look like. The blue cells should be from the chart of accountsarrow_forwardWhich of the following statements concerning the entries made on the spreadsheet used to prepare the statement of cash flows is true? a.The entries are not posted to the ledger. b.The entries are used in preparing the data on the spreadsheet. c.The entries are used in summarizing the data on the spreadsheet. d.All of these choices are correct.arrow_forward
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