The Managing Director of a Trading Company, has just received summary sets of Financial Statements for...
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The Managing Director of a Trading Company, has just received summary sets of Financial Statements for last year and this year. Trading Company Income Statements for years ended December 31 last year and this year Last year $ 1,800,000 This year $ 1,920,000 Sales Revenue Cost of Goods Sold: Beginning Inventories Purchases Cost of Goods Available for Sales Ending Inventories Cost of Goods Sold Gross Margin/Profit Expenses Net Income/Profit Assets: Current Assets: Cash Trade Receivables Inventories Total Current Assets Non-Current Assets Total Assets Liabilities: Current Liabilities Trade Payables Stockholders' Equity: Common Stock $1 par value Retained Earnings 160,000 1,120,000 1,280,000 (200,000) (1,080,000) 720,000 (680,000) 40,000 Balance Sheets as at December 31 last year and this year Last year $ This year $ Total SHE Total Liabilities and SHE 4,000 375,000 200.000 579,000 950,000 1.529.000 195,000 825,000 509,000 200,000 1,175,000 1,375,000 (250,000) 1.334,000 1.529.000 (1.125.000) 795,000 (750,000) 45.000 2,000 480,000 250.000 732,000 930,000 1,662,000 225,000 883,000 554,000 1.437,000 1.662.000 The Finance Director has expressed concern at the increase in Inventories and Trade Receivables levels. Question 4 1 mark State how each of the following events would affect the firm's Balance Sheet. State whether each change is a source or use of Cash and whether it is a Source or Use of funds. (a) The Firm doubles its quarterly Dividends; (b) The Firm issues $1 million of Long-Term debt and uses the proceeds to repay a Short-Term Bank Loan; The Managing Director of a Trading Company, has just received summary sets of Financial Statements for last year and this year. Trading Company Income Statements for years ended December 31 last year and this year Last year $ 1,800,000 This year $ 1,920,000 Sales Revenue Cost of Goods Sold: Beginning Inventories Purchases Cost of Goods Available for Sales Ending Inventories Cost of Goods Sold Gross Margin/Profit Expenses Net Income/Profit Assets: Current Assets: Cash Trade Receivables Inventories Total Current Assets Non-Current Assets Total Assets Liabilities: Current Liabilities Trade Payables Stockholders' Equity: Common Stock $1 par value Retained Earnings 160,000 1,120,000 1,280,000 (200,000) (1,080,000) 720,000 (680,000) 40,000 Balance Sheets as at December 31 last year and this year Last year $ This year $ Total SHE Total Liabilities and SHE 4,000 375,000 200.000 579,000 950,000 1.529.000 195,000 825,000 509,000 200,000 1,175,000 1,375,000 (250,000) 1.334,000 1.529.000 (1.125.000) 795,000 (750,000) 45.000 2,000 480,000 250.000 732,000 930,000 1,662,000 225,000 883,000 554,000 1.437,000 1.662.000 The Finance Director has expressed concern at the increase in Inventories and Trade Receivables levels. Question 4 1 mark State how each of the following events would affect the firm's Balance Sheet. State whether each change is a source or use of Cash and whether it is a Source or Use of funds. (a) The Firm doubles its quarterly Dividends; (b) The Firm issues $1 million of Long-Term debt and uses the proceeds to repay a Short-Term Bank Loan;
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Related Book For
Accounting and Finance An Introduction
ISBN: 978-1292088297
8th edition
Authors: Peter Atrill, Eddie McLaney
Posted Date:
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