You work for Bank as an analyst specializing in the financial statements of small business

You work for Bank as an analyst specializing in the financial statements of small business

You work for Bank as an analyst specializing in the financial statements of small businesses seeking loans from the bank. Company provides you with its balance sheet for December 31, 2012 and 2013 (Exhibit 6.21), and its income statement for 2013 (Exhibit 6.22). Company acquired no new property, plant, and equipment during the year.

 

a. What is and how do you figure out the amount of cash received from customers during 2013.

b. What is and how do you figure out the acquisition cost of merchandise purchased during 2013.

c. What is and how do you figure out the amount of cash paid to suppliers of merchandise during 2013.

d. What is and how do you figure out the amount of cash paid to salaried employees during 2013.

e. What is and how do you figure out the amount of cash paid to insurance companies during 2013.

f. What is and how do you figure out the amount of cash paid to landlords for space rented during 2013.

g. What is and how do you figure out the amount of dividends paid during 2013.

h. What is and how do you figure out the amount of cash received when property, plant, and equipment were sold during 2013.

 

 

Digit Retail Enterprises, Inc. (EXHIBIT 6.21)

Balance Sheet (Problem 33)

December 31, 2013 December 31, 2012

ASSETS

Current Assets

Cash $50,000 $36.000

Accounts Receivable 38,000 23,000

Notes Receivable --- 7,500

Interest Receivable --- 100

Merchandise Inventory 65,000 48,000

Prepaid Insurance 12,000 9,000

Prepaid Rent ----- 2,000

Total Current Assets 165,000 125,600

 

Property, Plant, and Equipment

At Cost $90,000 $100,000

Less Accumulated Depreciation (35,000) (20,000)

Net $55,000 $80,000

 

Total Assets $220,000 $205,600

 

LIABILITIES AND SHAREHOLDER'S EQUITY

Current Liabilities

Accounts Payable-Merchandise Suppliers $20,000 $18,000

Salaries Payable 2,800 2,100

Rent Payable 3,000 ----

Advances from Customers 6,100 8,500

Note Payable 5,500 -----

Dividends Payable 2,600 4,200

Other Current Liabilities 3,700 1,300

Total Current Liabilities $43,700 $34,100

 

Shareholders' Equity

Common Stock $164,500 $160,000

Retained Earnings. 11,800 11,500

Total Shareholders' Equity. 176,300 171,500

 

Total Liabilities and Shareholders' Equity $220,000 $205,600

 

 

 

Digit Retail Enterprises, Inc. (Exhibit 6.22)

Income Statement For 2013 (Problem 33)

Sales Revenue $270,000

Gain on Sale of Property, Plant, and Equipment 3,200

Interest Revenue . 200

Total Revenues . $273,400

 

Less Expenses: .

Cost of Goods Sold $145,000

Salaries Expense . . 68,000

Rent Expense . . . . 12,000

Insurance Expense 5,000

Depreciation Expense. 20,000

Other Expenses. 13,800

Total Expenses $263,800

 

Net Income $9,600

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