FINA $350$ Fall $2024-$ Sample Exam $2$

Name:

Date:

Section I: Financial Statements $(30$ Points$)$

Balance Sheet $(10$ Points$)$

a$.$ Curve Ball: A company has current assets of $$180,000,$

long$-$term assets of $$370,000,$ and total liabilities of

$$400,000.$ During the year, the company issued $$50,000$ in

new common stock. If the company's retained earnings

decreased by $$30,000$ due to a net loss, what is the total

equity at the end of the year?

Total Equity:

$(5$ Points$)$

b$.$ Assume a company s totas assets increased by $$100,000$

over the year. Total liabilities increased by $$40,000,$ and the

company paid $$20,000$ in dividends. If the common stock

remained unchanged, how much did the retained earnings

change?

Change in Retained Earnings:

Points$)$

Income Statement $(10$ Points$)$

a$.$ A company's income statement shows the following for

the year:

Revenue: $$500,000$

Cost of Goods Sold $($COGS$)$: $$300,000$

Operating Expenses: $$120,000$

Interest Expense: $$10,000$

Tax Rate: $25\%$

Curve Ball: The company decided to sell off one of its

divisions for $$50,000,$ which resulted in a one$-$time gain

reported separately on the income statement. What is the

company's net income after including this one$-$time gain?

Net Income:

$(5$ Points$)$

b$.$ If the company has $100,000$ shares outstanding and plans

to issue $20,000$ more shares after a stock split, what will be

the Earnings Per Share $($EPS$)$ before the split?

EPS Before Split: $5$ Points$)$

Constructing Financial Statements $(10$ Points$)$

Create a condensed balance sheet with the following

information:

Cash: $$20,000$

Accounts Receivable: $$15,000$

Inventory: $$35,000$

Property, Plant, and Equipment $($PP&E$)$: $$80,000$

Accounts Payable: $$25,000$

Short$-$term Debt: $$10,000$

Long$-$term Debt: $$40,000$

Common Stock: $$50,000$

Calculate Retained Earnings: Assume Total Assets $=$

Total Liabilities $+$ Total Equity

Retained Earnings:

Points$)$