Prepare a statement of cash flows using the direct
or indirect method (your choice) based on the
following. Make reasonable assumptions
as needed
		ABC Inc
		Income Statement
		12 mos
		ending
		12/31/2017
Sales		$22,000,000
Cost of Sales		13,200,000
Gross Profit		8,800,000
Operating Expense		3,300,000
Depreciation Expense		1,155,000
Tax Expense		825,000
Total Expense		5,280,000
Net Income		3,520,000
Other Information:
Equipment and computers were purchased for cash
100,000 shares of common stock sold for
$10 per share
Cash dividends of $150,000 were declared

		ABC Inc
		Comparative Balance Sheets
		12/31/2016		12/31/2017
Cash		$14,236,295		$19,658,695
Accounts Receivable, net		1,400,000		1,190,000
Inventory		2,500,000		2,460,000
Prepaid expenses		192,000		201,600
		18,328,295		23,510,295
Machinery and Equipment		4,400,000		4,505,000
Computers, Furniture and Fixtures		1,000,000		1,300,000
Subtotal		5,400,000		5,805,000
Less: Accumulated Depreciation		(2,900,000)		(4,055,000)
Net Long Term Assets		2,500,000		1,750,000
Total Assets		20,828,295		25,260,295
Liabilities		12/31/16		12/31/17
Accounts Payable		$756,000		$806,000
Accrued liabilities		1,200,000		1,140,000
Dividends Payable		120,000		132,000
Income taxes payable		300,000		360,000
Total current liabilities		2,376,000		2,438,000
Long Term Debt		2,756,295		2,756,295
Total Liabilities		$5,132,295		$5,194,295
Capital Stock*		$11,000,000		$12,000,000
Retained Earnings (Deficit)		4,696,000		8,066,000
	Total Shareholders' Equity	15,696,000		20,066,000
Total Liab + Capital		$20,828,295		$25,260,295
Shares of common outstanding		1,000,000.00		1,100,000

2 For ABC (above)
a. Compute Earnings per Share
b. PE ratio if the stock price is $36 and the outstanding shares are 1,100,000 in 2017
c. Compute the current ratio in 2017

3
Jan 1. Prepare journal entries for the issuance of $10,000,000, 11%, 10 year semmiannual bonds issued on 1/1 of this year at an effective rate of 12%.
Also prepare entries for payment of interest for the first two payments on 7/1 and 1/1

4
XYZ has 300,000 shares of $100 par, 3% cumulative preferred stock
and 3,000,000 shares of $1 par common stock
There are 400,000 shares of treasury stock (common)
Earnings before interest and tax is $6,200,000
Interest expense was $600,000 and the tax rate is 20%
The company did not pay a dividend last year and wishes to
pay a total of $2,000,000 in dividends
How much will each share of preferred and common receive?
Retained earnings at the beginning of the year are $90,000,000
What will be the final amount in retained earnings at the end of the year?
What are the earnings per common share?