Using Interrelationships among Financial Statements Corey Issacson is an investor in Stone Cold Enterprises. Last week he received the company”s most recent financial statements but some of the numbers were smudged and unreadable. Each of the unreadable numbers is represented with a letter on the following page.
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Stone Cold Enterprises |
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31 Dec 05 |
31 Dec 04 |
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(In thousands) |
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Assets |
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Cash |
$2,940 |
$1,020 |
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Accounts receivable |
1,850 |
1,225 |
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Merchandise |
2,855 |
1,000 |
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Prepaid insurance |
(a) |
3,000 |
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Property, plant and equipment |
25,000 |
(b) |
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Accumulated depreciation |
(c) |
6,250 |
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Other assets |
8,400 |
3,000 |
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Total assets |
$35,545 |
$ (d) |
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Liabilities and equity: |
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Accounts payable |
$1,580 |
$950 |
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Wages payable |
125 |
700 |
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Rent payable |
500 |
500 |
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Long term notes payable (8%) |
12,000 |
12,000 |
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Common stock |
(e) |
(f) |
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Retained earnings |
(g) |
10,845 |
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Total liabilities and equity |
$ (h) |
$ (i) |
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Stone Cold Enterprises |
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Common |
Retained |
Total |
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Balance, December 31, 2004 |
$3,000 |
$ (j) |
$ (k) |
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Issued common stock |
(l) |
(m) |
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Net income |
14,495 |
14,495 |
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Dividends paid |
9,000 |
9,000 |
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Balance, December 31, 2005 |
$5,000 |
$ (n) |
$21,340 |
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Stone Cold Enterprises |
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Sales revenue |
$103,000 |
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Cost of goods sold |
66,000 |
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Gross profit |
37,000 |
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Operating expenses: |
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Wages |
$5,490 |
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Interest |
(o) |
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Rent |
(p) |
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Insurance |
1,000 |
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Depreciation |
1,250 |
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Total operating expenses |
(q) |
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Pretax income |
(r) |
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Income taxes (35%) |
(s) |
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Net income |
$ (t) |
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Additional information:
1. No items of plant, property and equipment were purchased or sold during the year.
2. The prepaid insurance account represents the remaining portion of a four year policy purchased on January 1, 2004.
3. The rent payable account at year end (both years) represents December”s rent that had not yet been paid.
Required Use your knowledge regarding the interrelationships among financial statements to determine each of the missing amounts.