Question

. Q2 A. (20 Marks) Financial Statements. South Sea Baubles has the following (incomplete) balance sheet and income statement. BALANCE SHEET, AS OF END OF YEAR (Figures in millions of dollars) Assets 1996 1997 Liabilities & Shareholders 1996 1997 Equity I Current assets $90 $140 Current liabilities $50 $60 Net fixed assets $800 $900 Long-term debt $600 $750 INCOME STATEMENT, 1997 (Figures in millions of dollars) Revenue Cost of goods sold $1,950 $1,030 Depreciation $350 Interest expense $240 a. What is shareholders' equity in 1996 and 1997? b. What is net working capital in 1996 and 1997? C. What is taxable income and taxes paid in 1997? Assume the firm pays taxes equal to 35 percent of taxable income.

Answer 1

complete Balance sheet 1996 i abilities Amount Assates Amount Shareholders current Assades go Teruty 240 Net fixed Corrent liabilities 50 800 Assates long-term debut 600 on 1996 890 890 We know that a share holders entity + liabilities Assates : Share holder's trity - Assates - liabilities 2890 - 650 ८२५० Income statement, 1998 $ Revenue 1950 sta E) cost of goods sold (1030) - Depriciation (350). E) Interst EX (240) Net Income (Before 330 fooey complete Balance sheet agg7 Assates Reuity & liabilities Amount share holder's fauty (230 corrent Afsates current liability 60 z کو انسان را از Amount 140 Net Foxed Assates goo long term dent 750 C 1040 1040 1870

Share holdets equity 2 Assotes- liabilities lgo7 2 1040 - 810 2230 a- Share holder's Equity 1996=240 $ 1997=230 $ b Net working capitala ewrrent Assates current liabilities 1996=190 - 50) = 40$ 1998 2 (140- 60)2 80$ e. Taxable Ineome in 1997=330 $ After paying taxe Net Income - 330-(33043560) = 214.5 $