Dispensers of California, Inc

Balance Sheet Transaction Analysis

Transactions

Assets = Liabilities Equity
1a
1b
Hynes investment
Other investors
+ Patent $120,000
+ Cash 80,000
+ Common Stock $120,000
+ Common Stock 80,000
2 Incorporation costs - Cash $2,500 - Retained earnings $2,500
3 Equipment purchase -Cash $85,000
+ Equipment 85,000

4 Redesign costs - Cash $25,000 - Retained earnings $25,000
5 Component parts purchase + Inventory $212,100
- Cash 212,100

6 Bank loan
Bank loan repaid
Loan interest
+ Cash $30,000
- Cash 30,000
- Cash 500
+Bank loan $30,000
- Bank loan 30, 000


- Retained earnings $500
7 Manufacturing payroll - Cash $145,000 - Retained earnings $145,000
8 Other manufacturing costs - Cash 62,000 - Retained earnings $62,000
9 Selling general and administration - Cash $63,000 - Retained earnings $63,000
10 Ending inventory (cost of goods sold) * - Inventory $197,000 - Retained earnings $197,000
11 Sales + Cash $598,500 + Retained earnings $598,500
12 Incorporation and redesign costs (expenses as
incurred)
See 2 and 4
13 Depreciation - Equipment $8,500 - Retained earnings $8,500
14 Patent amortization - Patent $20,000 - Retained earnings $20,000
15 Ending work-in-progress and completed
inventory (none) (cost of goods sold)**
See 5, 7, 8, 10 and 13
16 Dividends - Cash $5,000 - Retained earnings $5,000
17 Income Taxes +Taxes payable $22,500 - Retained earnings $22,500

* Beginning component parts inventory $0 **Component parts used $197,000
Purchases 212,100 Manufacturing payroll 145,000
Total available 212,100 Other manufacturing costs 62,000
Ending component parts inventory 15,100 Depreciation 8,500
Components parts used 197,000 Cost of goods sold 412,500

Dispensers of California, Inc.
12-month Profit Plan


Sales $598,500
Cost of goods sold
Components $197,000
Mfg payroll 145,000
Other Mfg. 62,000
Depreciation 8,500 412,500
Gross margin $186,000
Selling, general and
Administration 63,000
Patent 20,000
Redesign costs 25,000
Incorporation costs 2,500
Operating profit $75,500
Interest 500
Profit before taxes $75,000
Tax expense 22,500
Net Income $52,500




Dispensers of California, Inc.
Projected Year-end Balance Sheet



Assets Liabilities
Cash $78,400 Taxes payable $22,500
Components inventory 15,100 Current liabilities $22,500
Current assets $93,500
Equipment (net) 76,500 Owners Equity
Patent (net) 100,000 Capital stock $200,000
___ Retained earnings 47,500
$270,000 $270,000

Dispensers of California, Inc.
Change in Retained Earnings



Beginning retained earnings $0
Net income 52,500
Dividends (5,000)
Ending retained earnings $47,500





Dispensers of California, Inc.
Cash Reconciliation


Receipts Disbursements
New equity capital $80,000
Incorporation $2,500
Equipment 85,000
Redesign 25,000
Component parts 212,100
Bank loan 30,000
Bank loan 30,000
Loan interest 500
Manufacturing payroll 145,000
Other manufacturing 62,000
S G & A 63,000
Sales 598,500
Dividend 5,000
Total $708,500 $630,100


Cash Reconciliation
Receipts $708,500
Disbursements 630,100
Ending Balance $78,400

Dispensers of California, Inc.
Statement of Cash Flows (Direct Method)


Collections from customers $598,500
Payments to suppliers (212,100)
Payments to employees (295,000)
Legal payments (2,500)
Interest (500)
Operating cash flow $89,400
Equipment purchases (85,000)
Investing cash flow $(85,000)
Bank loan 30,000
Repayment of bank loan (30,000)
Capital 80,000
Dividends (5,000)
Financing cash flow $75,000
Change in cash $78,400
Beginning cash 0
Ending cash $78,400