------------------------------------------------------------------------------------------------------------------------ part 2 Spring 2023 Business Finance Alka Bramhandkar Homework Chapter 2 DUE: TBA A company had sales of $700,000 in 2021 and cost of goods sold represented 65 percent of sales. Selling and administrative expenses were 11 percent of sales. General administrative expenses were 2 percent of sales. Depreciation expense was $20,500 and the total debt of $100,000 carried interest rate of 9 percent. The firms tax rate is 35 percent. Prepare an income statement in a good format. The ABC Corporation has current assets of $200,000, gross fixed assets of $600,000 and accumulated depreciation of $350,000. The current liabilities are $50,000, and bonds of $90,000. There is $45,000 in preferred stock outstanding; 25,000 shares of common stock have been issued. Compute book value (net worth) per share. If there is $15,000 in earnings available to common stockholders and ABCs stock has a P/E of 10 times earnings per share, what is the current price of the stock? What is the ratio of market value per share to book value per share? On December 31, 2021, the balance sheet of Maximum Corporation was as follows: Current Assets Liabilities Cash $ 12,000 Accounts payable $ 10,000 Accounts receivable 13,000 Notes payable 22,000 Inventory 30,000 Bonds payable 50,000 Prepaid expenses 7,000 Fixed Assets Stockholders Equity Plant and equipment (gross) $250,000 Preferred stock (par $100 per share) $ 20,000 Less: Accumulated Common stock 55,000 depreciation 50,000 Paid-in capital 25,000 Net plant and equipment 200,000 Retained earnings 80,000 Total assets $262,000 Total liabilities and stockholders equity $262,000 Sales for 2022 are expected to be $250,000, and the cost of goods sold 50 percent of sales. Selling and administrative expense was $20,000. Depreciation expense was 7 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 9 percent, while the interest rate on the bonds payable was 10 percent. This interest expense is based on December 22, 2021, balances. The tax rate averaged 25 percent. Preferred stock dividends of $5 per share were paid and $9,200 in dividends were paid to common stockholders. There were 11,000 shares of common stock outstanding. During 2022, the cash balance was unchanged. Prepaid expenses went up by $3,000. Accounts receivable and inventory increased by 15 percent. A new machine was purchased on December 31, 2021, at a cost of $41,240. Accounts payable decreased by 10 percent. Notes payable decreased $6,000 and bonds payable decreased $10,000, both at the end of the year 2022. The preferred stock, common stock, and paid-in capital in excess of par accounts did not change. Prepare an income statement for 2022. Prepare a statement of retained earnings for 2022. Prepare a balance sheet as of December 31, 2022. Prepare a statement of cash flows using the correct format for the year 2022 (i.e., difference for 2022 compared to 2021). Selected data from the income statement for the year 2022 is: No dividends were paid. Depreciation expenses $100,000. NANO Inc. Balance Sheet Assets 2022 (CURRENT) 2021 Cash................................................................... $ 30,000 $ 40,000 Marketable securities...................................... 30,000 25,000 Accounts receivable......................................... 360,000 259,000 Inventory........................................................... 290,000 261,000 Total current assets..................................... $ 710,000 $ 585,000 Net plant and equipment................................ 1,390,000 765,000 Total assets....................................................... $2,100,000 $1,350,000 Liabilities and Stockholders Equity Accounts payable............................................. $ 505,000 $ 310,000 Accrued expenses............................................. 35,000 30,000 Total current liabilities................................ $ 540,000 $ 340,000 Long-term liabilities........................................ 703,900 363,600 Total liabilities.............................................. $ 1,243,900 $ 703,600 Common stock ($2 par).................................. 76,000 60,000 Capital paid in excess of par........................... 264,000 190,000 Retained earnings............................................ 516,100 396,400 Total stockholders equity........................... $ 856,100 $ 646,400 Total liabilities and stockholders equity...... $2,100,000 $1,350,000 Nano also purchased new equipment costing $725,000 (gross) in the year 2022. Explain the impact of the following transactions on a company's income statement (IS) & balance sheet (BS). Indicate the affected statement, amount, items, and whether the items will increase or decrease: Goods worth $20,000 are sold for credit. The COGS is estimated at 69% and the tax rate and dividend payout ratios are 0%. A five-year loan for $100,000 was taken out from a bank to buy a new computer system for $120,000. Complete sentences are not necessary.