Fi 320 Hw 2

Pages: 4 (679 words) Published: January 26, 2013
Chapter 2 HOMEWORK ASSIGNMENTS
#1. Billy’s Exterminators, Inc., has sales of \$643,000, costs of \$280,000, depreciation expense of \$32,000, interest expense of \$26,000, and a tax rate of 35 percent. What is the net income for this firm?| |

PROVIDE SOLUTION HERE:
The income statement for the company is:|
Income Statement|
Sales| \$643,000| |
Costs| \$280,000| |
Depreciation| \$32,000| |
| | |
EBIT| \$331,000| |
Interest| \$26,000| |
| | |
EBT| \$305,000| |
Taxes (35%)| \$106,750| |
| | |
Net income| \$198,250| |

Hence Net income is….________\$198,250___________

#2. Given the following information, what is the cash flow to creditors for 2011?  | 2010| 2011|
Sales| 5831| 6423|
COGS| 3670| 4109|
Interest| 291| 280|
Depreciation| 125| 122|
Cash| 250| 313|
Accounts receivables| 1092| 1162|
Current liabilities| 717| 1051|
Inventory| 1495| 1521|
Long-term debt| 2400| 1100|
Net fixed assets| 4006| 4123|
Common Stock| 1900| 2100|
Taxes| 590| 670|

PROVIDE SOLUTION HERE: CF to creditors = interest paid – net new long term borrowing CF to creditors = 280 – ( -1300) = \$1580

#3. Given below is financial information for Fowler’s Flower Shop.
Fowler’s Flower Shop
Income Statement
For the Years Ended December 31, 2010 and 2011.
| 2011| 2010|
Sales| \$3,550,000| \$3,340,000|
Cost of Goods Sold| 1,750,000| 1,662,000|
Other Expenses| 276,500| 220,000|
Depreciation| 80,000| 66,000|
EBIT| \$1,443,500| \$1,392,000|
Interest Expense| 243,000| 306,500|
EBT| \$1,200,500| \$1,085,500|
Taxes (35%)| 420,175| 379,925|
Net Income| \$780,325| \$705,575|
| | |
Dividends| \$108,000| \$74,000|

Fowler’s Flower Shop
Balance Sheet
December 31, 2010 & December 31, 2011
Assets| 2011| 2010| Liabilities & S.E.| 2011| 2010|
Current Assets| | | Current Liabilities| | |
Cash|...