Chemalite Case Study

Only available on StudyMode
  • Download(s) : 2214
  • Published : October 15, 2012
Open Document
Text Preview
Assignment for Chemalite, Inc.
Part A: Financial statements for Chemalite, Inc.
1) Balance Sheet as at 12/31/2003| | |
ASSETS| | |
Current Assets| | |
Cash| | $113,000|
Accounts Receivable| | 69,500|
Inventory|  | 55,000|
Total Current Assets| | 237,500|
Machinery| | 201,875|
Prototype| | 23,750|
Intangible Assets| | 100,000|
TOTAL ASSETS|  | 563,125|
| | |
LIABILITIES AND SHAREHOLDERS' EQUITY| | |
Current Liabilities| | |
Accounts Payable| | 0|
Total Current Liabilities|  | 0|
Shareholders' Equity| | |
Capital| | 500,000|
Retained Earnings| | 63,125|
Total Shareholders' Equity|  | 563,125|
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES|  | 563,125|

2) Income Statement for the year ended 12/31/2003
Net sales| $754,500 |
Cost of Sales| -$545,000 |
Gross profit| $209,500 |
Advertising| -$22,500 |
Depreciation| -$35,625 |
Salaries and wages| -$80,000 |
Incorporation expenses| -$7,500 |
Operating income| $63,875 |
Interest expenses| -$750 |
Earnings before Income tax expenses| $63,125 |
Tax| -|
Net Income| $63,125|

3) Statement of Cash Flows for the year ended 12/31/2003 Operations| |
Net Income| $63,125 |
Depreciation | $35,625 |
Account Receivable| -$69,500 |
Inventory| -$55,000 |
Cash flow from operations| -$25,750 |
| |
Investing| |
Machinery| -$212,500 |
Prototype| -$23,750 |
Cash flow from investing| -$236,250 |
| |
Financing|  |
Cash flow from financing| -|
| |
Net Change in Cash for This Period| -$262,000 |
| |
Cash, Jan. 2 2003| $375,000 |
| |
Cash, Dec. 31 2003| $113,000 |

Appendix 1: journal entries
⑴January 2
Cash ……………………………………………………………………………………………………. 375,000 Contributed Capital …………………………………………………………………………………………….375, 000 Assets| =| Liabilities| +| Shareholders’ Equity|
+375,000| | | | +375,000|
The establishment of Chemalite, Inc. part 1

⑵January 2
Patent Shares ……………………………………………………………………………………………………. 125,000 Shareholder's Equity …………………………………………………………………………………………….125,000 Assets| =| Liabilities| +| Shareholders’ Equity|
+125,000| | | | +125,000|
The establishment of Chemalite, Inc. part 2

⑶ January 15
Incorporation Expenses ……………………………………………………………………7,500 Cash ….............................................................................................7,500 Assets| =| Liabilities| +| Shareholders’ Equity|

-7,500| | | | -7,500|
Legal fees, charter costs, and printing expenses associated with the incorporation of the company.

⑷June 15
Machinery……………………………………………………………………………………………62,500 Cash …………………………………………………………………………………………….……..62,500 Assets| =| Liabilities| +| Shareholders’ Equity|
-62,500| | | | |
+62,500| | | | |
Built the machinery for the first commercial models.

⑸June 24
Inventory……………………………………………………………………………………………75,000 Cash …………………………………………………………………………………………….……..75,000 Assets| =| Liabilities| +| Shareholders’ Equity|
-75,000| | | | |
+75,000| | | | |
Purchased inventory.

⑹July
Prototypes……………………………………………………………………………………………2, 3750 Cash …………………………………………………………………………………………….…….. 2, 3750 Assets| =| Liabilities| +| Shareholders’ Equity|
-2,3750| | | | |
+2,3750| | | | |
Purchase of prototype.

⑺July to December
Cash……………………………………………………………………………………………685,000 Account Receivable…………………………………………………………………….69, 500 Sales…………………………………………………………………………………………….. 754,500 Assets| =| Liabilities| +| Shareholders’ Equity|

+685,000| | | | +754,500|
+69,500| | | | |
Sales of the product.

⑻July to December
Inventory………………………………………………………………………………………………175,000 Cash …………………………………………………………………………………………….…….. 175,000 Assets| =| Liabilities| +| Shareholders’ Equity|
+175,000| | | | |
-175,000| | |...
tracking img