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ABC CORP BALANCE SHEET December 31, 2010 $100 Cash 0 Marketable Securities 2,000 Accounts Receivables 140 Inventory Fixed Assets Lnet) 2,000 Total Assets $2,380 Accounts Payable 0 Notes Payable Retained earnings 1400 Common Stock Total of Both Liabilities & Equity For the year ended 12/31/10 ABC CORP generated Sales of $12,000 and Net Income of $120. The net profit margin this year is considered normal by ABC CORP. Cost of Goods Sold was $8,400 in 2010. Cost of Goods Sold consistently averages seventy per cent of Sales, and will continue to do so in the future. Depreciation Expense was $500 in 2010. No Depreciation Expense was, or ever will, be included in Cost of Goods Sold. Fixed Operating Costs, excluding Depreciation Expense, were equal to $1,200 for 2010. These Fixed Operating Costs included all utilities, all insurance, all rent, all property taxes, and all labor charges. Fixed Operating Costs (other than depreciation expense) are paid for immediately, as they are incurred. Fixed Operating Costs were spread evenly throughout the year 2010. With regard to the size and timing of these costs, it is anticipated that the experience of 2010 will be repeated in 2011 Therefore, we anticipate cash payments associated with Fixed Operating Costs to equal $100 per month in 2011. Because of losses in recent years at ABC Corp and the loss carry forward provisions of the tax code there were no income taxes paid in 2010, and it is anticipated in 2011 that no income tax payments will be made. Interest paid in 2010 was $40 and dividends paid in that same year were S60 lnterest payments are made monthly and dividends are paid at the end of every quarter. The next dividend payment is scheduled for March 2011. The dividend payout ratio in 2010 is considered normal for ABC CORP. The

Answer 1

Cost of good sold -Jan 2011=700(70 %of 1000 sales as mentioned).

Beginning inventory-560 ending inventory of last month

Ending inventory-140(20% of 70% of 800sales as mentioned).

Purchases-1120(560+700-140)(beginning inventory-cost of good sold-closing inventory)

Collected in Month of sale- 920 as 10 percent is