Fin 486 Final Exam
Finance 486 Final Exam
1. Income Statement Preparation - 25 points a. Prepare an income statement for Cathy Chen, CPA, for the year ended December 31, 2009 Cathy Chen, CPA
Income Statement for the Year Ended December 31, 2009 | Sales revenue | | $360,000 | Less: Operating expenses | | | Salaries | 180,000 | | Employment taxes and benefits | 34,600 | | Supplies | 10,400 | | Travel & entertainment | 17,000 | | Lease payment | 32,400 | | Depreciation expense | 15,600 | | Total operating expense | | 290,000 | Operating profits | | $ 70,000 | Less: Interest expense | | 15,000 | Net profits before taxes | | $ 55,000 | Less: Taxes (30%) | | 16,500 | Net profits after taxes | | $ 38,500 |
b. In the first year of practise, Cathy Chen will have met her operating expense of $290K, paid $15K of interest, and after a 30% tax expense, Cathy will have $38 500 net profits after tax, from a Sales Revenue of $360,000.
2. Pro Forma Income Statement – Scenario analysis - 15 points a. See Below Pro Forma Table for Percentage of Sales Statement Pro Forma Income Statement Allen Products, Inc. for the Year Ended December 31, 2010 | Pessimistic | Most Likely | Optimistic | Sales | $900,000 | $1,125,000 | $1,280,000 | Less cost of goods sold (45%) | 405,000 | 506,250 | 576,000 | Gross profits | $495,000 | $ 618,750 | $ 704,000 | Less operating expense (25%) | 225,000 | 281,250 | 320,000 | Operating profits | $270,000 | $ 337,500 | $ 384,000 | Less interest expense (3.2%) | 28,800 | 36,000 | 40,960 | Net profit before taxes | $241,200 | $ 301,500 | $ 343,040 | Taxes (25%) | 60,300 | 75,375 | 85,760 | Net profits after taxes | $180,900 | $ 226,125 | $ 257,280 |
b. Percent of Sales is a simple method that accepts all costs to the company is variable
1. Income Statement Preparation - 25 points a. Prepare an income statement for Cathy Chen, CPA, for the year ended December 31, 2009 Cathy Chen, CPA
Income Statement for the Year Ended December 31, 2009 | Sales revenue | | $360,000 | Less: Operating expenses | | | Salaries | 180,000 | | Employment taxes and benefits | 34,600 | | Supplies | 10,400 | | Travel & entertainment | 17,000 | | Lease payment | 32,400 | | Depreciation expense | 15,600 | | Total operating expense | | 290,000 | Operating profits | | $ 70,000 | Less: Interest expense | | 15,000 | Net profits before taxes | | $ 55,000 | Less: Taxes (30%) | | 16,500 | Net profits after taxes | | $ 38,500 |
b. In the first year of practise, Cathy Chen will have met her operating expense of $290K, paid $15K of interest, and after a 30% tax expense, Cathy will have $38 500 net profits after tax, from a Sales Revenue of $360,000.
2. Pro Forma Income Statement – Scenario analysis - 15 points a. See Below Pro Forma Table for Percentage of Sales Statement Pro Forma Income Statement Allen Products, Inc. for the Year Ended December 31, 2010 | Pessimistic | Most Likely | Optimistic | Sales | $900,000 | $1,125,000 | $1,280,000 | Less cost of goods sold (45%) | 405,000 | 506,250 | 576,000 | Gross profits | $495,000 | $ 618,750 | $ 704,000 | Less operating expense (25%) | 225,000 | 281,250 | 320,000 | Operating profits | $270,000 | $ 337,500 | $ 384,000 | Less interest expense (3.2%) | 28,800 | 36,000 | 40,960 | Net profit before taxes | $241,200 | $ 301,500 | $ 343,040 | Taxes (25%) | 60,300 | 75,375 | 85,760 | Net profits after taxes | $180,900 | $ 226,125 | $ 257,280 |
b. Percent of Sales is a simple method that accepts all costs to the company is variable