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
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
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
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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