Module 2 Critical Thinking Assignment:
Understanding Financial Statements, Cash Flows and Taxes
*Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit; no hard keys.
Problem 2-1: Preparing Financial Statements
|Information below is for Warner Manufacturing, Inc. for the year ended December 31, 20×1 except where beginning of year numbers indicated. All amounts in SAR unless otherwise stated.Using the information below:1. Prepare an income statement with the proper title2. Prepare end of year balance sheet with the proper title3. Calculate net working capital4. Calculate the debt ratio*Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit; no hard keys.DATADepreciation expense66,000Cash220,000Long-Term Debt330,000Net Sales615,000Accounts payable102,000Marketing and general and administrative expenses79,000Buildings and Equipment895,000Notes payable7,5000Accounts receivable156,000Interest expense4,750Accrued expenses7,900Common Stock289,000Cost of Goods sold297,000Inventory99,300Taxes67,300Accumulated Depreciation-26,3000Prepaid expenses14,500Taxes payable55,000Retained earnings262,900|
|Problem 2-2 Preparing Statement of Cash Flows|
|Given the following information, prepare a statement of cash flows.DATAIncrease in accounts receivable30Increase in inventories30Operating Income95Interest Expense30Increase in accounts payable25Dividends15Increase in common stock20Increase in net fixed assets23Depreciation Expense12Income taxes17Beginning cash20|
|Assume all amounts are in 000’s SAR.|