Carbiner Co

Subscriptions Sold
Taxable Income
Federal Tax Rate

28,000
$130,000
40%

Federal Income Taxes Payable

Advances on Magazine Subscriptions
Total Current Liabilities

$52,000
$840,000
$892,000

$40
Quarterly

$1,120,000 Monthly

Face Amount

$25,000

a)
Statement of Cash Flows
Assets

b)
Statement of Cash Flows
Assets
Cash
-$25,375
Statement of Cash Flows
Operating

-$25,375

90 Days

Balance Sheet
Liabilities
Accounts Payable
Notes Payable
-$25,000
$25,000

Balance Sheet
Liabilities
Notes Payable
-$25,000

6%

Stockholders' Equity

Stockholders' Equity
Retained Earnings
-$375

Interest Expense

Income Statement

Income Statement

Income Statement
-$375

Maltese Chemical Company experienced a hazardous materials

Fine
Damages
Law Suit
Reduction in Resale Value
Settlement

$750,000
$4,300,000
$180,000
$180,000
$90,000

a)
Statement of Cash Flows
Assets

Balance Sheet
Liabilities
EPA Fines Payable
$750,000

b)
The company experienced a hazardous materials spill at one of its plants
during the previous period. This spill has resulted in a number of lawsuits to which the company is a
party. The Environmental Protection Agency (EPA) has fined the company $750,000, which the
company is contesting in court. Although the company does not admit fault, legal counsel believes
that the
fine payment is probable. In addition, an employee has sued the company. A $90,000 out-of-court
settlement has been reached with the employee. The EPA fine and out-of-court settlement have been
recognized as an expense for the period. There is one other outstanding lawsuit related to this
incident. Counsel does not believe that the lawsuit has merit. Other lawsuits and
unknown liabilities may arise from this incident.

Balance Sheet

mpany is a
ch the
believes

of-court
have been
this

Income Statement

Stockholders' Equity
Litigation Claims Pay.
Retained Earnings
$90,000
-$840,000
Income Statement
Damage Awards & Fines Exp. -$840,000

Rate per Hour

Hours Worked
Gross Pay
Social Security Tax Rate
Medicare Tax Rate
Federal Income Tax Withheld

$35
52
$62,000
6%
1.50%
$128

a)
Regular Pay
Overtime Pay
Gross Pay for the Week

$1,400
$630
$2,030

b)
Gross Pay
Less: FICA
Federal Withholding
Net Pay

Overtime

up to

$2,030.00
$152.25
$128.00

$280.25
$1,749.75

$100,000

1.5

40

Cyber Tech Inc.

Face Value
Term
Annual Payments
Interest
Periods
Semi-annual Interest
Statement of Cash Flows

Mar. 1

$50,000,000
20
2
6%
40
3%

Statement of Cash Flows

Assets
Cash
-$1,500,000

Statement of Cash Flows

Sep. 1
Operating
Statement of Cash Flows
Assets
Dec. 31

Annually

Balance Sheet
Assets
Liabilities
Stockholders' Equity
Cash
Bonds Payable Retained Earnings
$50,000,000
$50,000,000

Statement of Cash Flows

Mar. 1
Financing

Sep. 1

years

$50,000,000
Balance Sheet
Liabilities
Stockholders' Equity
Bonds Payable Retained Earnings
-$1,500,000

-$1,500,000

Sep. 1

Balance Sheet
Liabilities
Stockholders' Equity
Interest Payable Retained Earnings
$1,000,000
-$1,000,000

Dec. 31

Income Statement

Income Statement

Sep. 1
Income Statement
Interest Expense -$1,500,000
Income Statement

Dec. 31
Income Statement
Interest Expense -$1,000,000

Quality Marble Inc.

Common Shares Issued
Par
Market Price
Preferred Shares Issued
Par
Market Price

75,000
$10
$23
100,000
$4
$6

a)
Statement of Cash Flows

Jan. 29

Assets
Cash
$1,725,000

Statement of Cash Flows

Jan. 29
Financing
Statement of Cash Flows

May 31

Assets
Cash
$600,000

Statement of Cash Flows

May 31
Financing
b)
Total Paid-in Capital

$2,325,000

Balance Sheet
Liabilities

Stockholders' Equity
Common Stock
$750,000

$1,725,000
Balance Sheet
Liabilities

$600,000

Stockholders' Equity
Preferred Stock
$400,000

Income Statement
Paid-in Capital in Excess of Par - Common Stock
$975,000

Income Statement
Paid-in Capital in Excess of Par - Prefererd Stock
$200,000

Calgary Water Supply

Common Shares Reacquired

a)
Treasury Stock

20,000

$44

$880,000

b)
In the Stockholders Equity section as a reduction (decrease).

c)
Calgary Water Supply may have purchased the stock to support the market price of the
stock, to provide shares for resale to employees, or for reis-suance to employees as a
bonus according to stock purchase agreements.

Anaconda Mining Co.

Salaries:
Sales Salaries
Warehouse Salaries
Office Salaries
Total Salaries

$315,000
$185,000
$125,000
$625,000

Tax Rae Assumed:

FICA
State Unemployment
Federal Unemployment

7.50%
4.20%
0.80%

1)
FICA Tax Payable

Assets

Balance Sheet
Liabilities
Employee
Income
Tax Payable
$98,000

July 17

FICA Tax
Payable
$46,875

Bond Deduction
Payable
$15,000

$46,875
$26,250
$5,000

4)
Statement of Cash Flows
Assets

July 17

$98,000
$15,000
$12,500

$46,875

2)
Statement of Cash Flows

3)
a)
FICA Tax Payable
b)
State Unemployment Tax Payable
c)
Federal Unemployment Tax Payable

Deductions:
Income Tax Withheld
U.S. Savings Bonds
Group Insurance

Balance Sheet
Liabilities
FICA Tax
SUTA
Payable
Payable
$46,875
$26,250

FUTA
Payable
$5,000

Income Statement
Stockholders' Equity
Group Ins. Salaries
Payable
Payable
$12,500 $452,625

Retained
Earnings
-$625,000

Income Statement
July 17 Salaes Salaries Expense
Warehouse Salaries Expense
Office Salaries Expense

July 17

-$315,000
-$185,000
-$125,000

Income Statement
Stockholders' Equity
Retained
Earnings
-$78,125

July 17

Income Statement
July 17 Payroll Expense

-$78,125

Yukun Bike Corp.

Shares Outstanding:
Preferred
Common

40,000
50,000

Market Prices:
Preferred
Common

$57.50
$5

2%
$1

$65

$ 52,000

Maximum yearly total preferred dividend:

Preferred Dividends
Year

1
2
3
4
5
6

Total
Dividends

Total

$ 28,000 $ 28,000
44,000
44,000
48,000
48,000
60,000
52,000
76,000
52,000
140,000
52,000

Common Dividends

Per Share

$0.70
$1.10
$1.20
$1.30
$1.30
$1.30
$6.90

Average annual dividend for preferred:

Average annual dividend for common:

$1.15
$0.40

Return on initial investment, preferred:

Return on initial investment, common:

2.0%
8.0%

Total

8,000
24,000
88,000

Common Dividends
Per Share

$0.00
0.00
0.00
0.16
0.48
1.76
$2.40

Google Inc.
Total Assets
Total Liabilities
Total Stockholders' Equity
Earnings per Share

1)
Liabilities to Total Assets
2)
Stockholders' Equity to Total Assets
3)
Liabilities to Stockholders' Equity
4)

Year 2
$93,798
$22,083
$71,715
$32.81

Year 1
$72,574
$14,429
$58,145
$29.76

Year 2

Year 1

23.5%

19.9%

76.5%

80.1%

30.8%

24.8%

Google is financed primarily with equity. The ratios of liabilities to total assets, stockholders equity to total assets, and liabilities to stockholders equi-ty
for Years 1 and 2 all indicate that total liabilities are less than total stockholders equity.

5)
Total liabilities have increased slightly as a percent of total assets in Year
2; thus, creditors would feel less safe. However, the large amount of
equity fi-nancing implies that creditors have little to worry about.

6)
Market Price
Year 2 EPS
7)
Market Price
Year 1 EPS
8)

$762.10
23.2276745
596.3
20.0

The price-earnings ratio has increased from 20.0 to 23.2 during

Year 2. This increase in the price-earnings ratio implies that the
market has changed its expectation for earnings growth and that it
expects earnings to grow faster than what had been expected in
Year 1.

Apple Inc.
Total Assets
Total Liabilities
Total Stockholders' Equity
Earnings per Share

1)
Liabilities to Total Assets
2)
Stockholders' Equity to Total Assets
3)
Liabilities to Stockholders' Equity
4)

Year 2
$176,064
$57,854
$118,210
$44.64

Year 1
$116,371
$39,756
$76,615
$28.05

Year 2

Year 1

32.9%

34.2%

67.1%

65.8%

48.9%

51.9%

Apple is financed primarily with equity. The ratios of liabilities to

total assets, stockholders equity to total assets, and liabilities to
stockholders equity for Years 1 and 2 all indicate that total
liabilities are less than total stockholders equity.

5)
Total liabilities have decreased slightly as a percent of total
assets in Year 2; thus, creditors would feel more safe. However,
the large amount of equity fi-nancing implies that creditors
have little to worry about.

6)
Market Price
Year 2 EPS
7)
Market Price
Year 1 EPS
8)

$444.38
10.0
459.7
16.4

The price-earnings ratio has decreased from 16.4 to 10.0 during Year 2. This
decrease in the price-earnings ratio implies that the market has changed its
expectation for earnings growth and that it expects earnings to grow slower than
what had been expected in Year 1. This change in expectations is proba-bly due
to concerns over whether Apple will be able to continue to innovate without the
leadership of Steve Jobs. In addition, Apple is facing increased competition for its
products, including Samsungs new Galaxy S3 cell phone. However, some
analysts argue that Apple is undervalued given its low price-earnings ratio of
10.0.

what had been expected in Year 1. This change in expectations is proba-bly due
to concerns over whether Apple will be able to continue to innovate without the
leadership of Steve Jobs. In addition, Apple is facing increased competition for its
products, including Samsungs new Galaxy S3 cell phone. However, some
analysts argue that Apple is undervalued given its low price-earnings ratio of
10.0.