Assignment 1 – Financial reports and basic concepts (16.11.

2018)

Student – Teodora Irimia (514387)

Question 1

Harbin, Inc.

Income Statement
March, 2018
$9,500 (revenues earned and received in
Revenues
cash)
less
Expenses $5,465 (expenses incurred and paid)
Net Income (Profit) $4,035

Question 2

Yellen Company

Revised Income Statement

August, 2018
Revenues $ 15,000 (service provided to customers)
less
Expenses $7,500 (expenses required to provide
service to customers)
Net Income (Profit) $7,500

Gross Margin = Profit / Revenue = $ 7,500 / $15, 000 = 50%

Mark-up: Profit / Expenses = $7,500 / $ 7,500 = 100%

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 Question 3

Yellen Company

Statement of Cash Flows

August, 2018
st
Beginning Cash Balance (1 of August) $7,200
Cash in-flows $15,000
$5,000
$15,000
Total: $35,000
less
Cash out-flows $12,000
$7,500
$16,000
Total: $35,500
Net Decrease in Cash $500 ($35,000 - $35,500)
End Cash Balance $6700 ($7,200-$500)

Question 4

Assets = $150,000
Liabilities = $85,000
Capital stock = $50,000

Assets = Liabilities + Equity =>

Equity = Assets – Liabilities = $150,000 - $85,000 = $65,000
Equity = Capital Stock + Retained Earnings =>
Retained Earnings = Equity – Capital Stock = $65,000 - $50,000 = $15,000

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Question 5

Assets = $780,000
Capital stock = $500,000
Retained earnings = $150,000

Equity = Capital Stock + Retained Earnings =>

Equity = $500,000 + $150,000 = $650,000
Assets = Liabilities + Equity =>
Liabilities = Assets – Equity = $780,000 - $650,000 = $130,000

Question 6

Total revenues = $300,000

Operating expenses = $205,000
Purchased land = $45,000

Net income = Revenues – Expenses = $300,000 - $205,000 = $95,000

Gross margin = Profit / Revenue = $95,000 / $300 000 = 31,66%
Mark-up = Profit / Expenses = $95,000 / $205,000 = 46,34%

Question 7

Revenues (cash) = $100,000

Expenses (cash) = $56,000
Truck (purchase) = $20,000
Land (sold) = $10,000
Loan from bank = $15,000

Change in cash = Cash in-flows – Cash out-flows =>

= > ($100,000 + $10,000 + $15,000) – ($56,000 + $20,000) = $49,000
(Net Increase)