Question

Comprehensive Problem (Chapter 2) Extreme Edge Ine. Income Statements For the Year Ended December 31 Sales revenues 2015 2014 S 1,310 1,240 Cost of goods sold Gross profit Depreciation expense 510 136 369 521 120 341 Income from continuing operations Financial (interest) expense Income tax expense (benefit) Net income (loss) 24 0.48 Earnings (loss) per share Statements of Shareholders' Equity (in thousands, except par value) Balance as of January 1, 2014 Common stock issued, $1 par value Net income Dividends declared and paid Common Additional Retained Stock PIC 50 S 450 S 24 2) Balance as of December 31, 2014 50 S 450 S 50 450 S Balance as of January 1, 2015 Common stock issued, S1 par value Net income (loss) Dividends declared and paid Balance as of December 31. 2015 Balance Sheets at December 31 50 S 450 2015 2014 Current Assets: Accounts receivable, net Inventory Prepaid expenses 160 335 187 175 280 Total current assets 655 Property, Plant and Equipment: Equipment, net of depreciation 204- 260 915 Total Assets S 806

Answer 1

The answers are highlighted in bold below and their computations are also provided:

(1): Cost of goods sold in 2015 = sales revenue – gross profit = 1310-510 = 800

(2): Earnings (loss) per share in 2015 = net loss of 2015/no. of shares = -9/50 = -0.18

(3): Retained earnings balance as of December 31, 2105 = opening balance – net loss = 66-9 = 57

(4): Cash in 2015 = Total current assets – accounts receivable – inventory - prepaid expenses = 602-160-335 - 8 = 99

(5): Total liabilities and shareholders equity in 2015 = total liabilities+total equity = 249+557 = 806

(6): Cash end of the year = beginning cash-net change in cash = 187-88 = 99