Essay on Homework 2

4347 Words Nov 26th, 2012 18 Pages
1. Construct a balance sheet for Sophie’s Sofas given the following data. (Be sure to list the assets andliabilities in order of their liquidity.) | Cash balances | = | $ | 8,000 | Inventory of sofas | = | $ | 180,000 | Store and property | = | $ | 80,000 | Accounts receivable | = | $ | 20,000 | Accounts payable | = | $ | 15,000 | Long-term debt | = | $ | 150,000 | | BALANCE SHEET OF SOPHIE’S SOFAS | Assets | | Liabilities & Shareholders’ Equity | | Cash | $ | Accounts payable | $ | Accounts receivable | | Long-term debt | | Inventory | | Shareholders’ equity | | Store & property | | | | | | | | Total assets | $ | Total liabilities & Shareholders' equity | $ | |
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7. Ponzi Products produced 98 chain letter kits this quarter, resulting in a total cash outlay of $12 per unit. It will sell 49 of the kits next quarter at a price of $13, and the other 49 kits in two quarters at a price of $14. It takes a full quarter for it to collect its bills from its customers. (Ignore possible sales in earlier or later quarters.) | a. | Prepare an income statement for Ponzi for today and for each of the next three quarters. Ignore taxes. (Leave no cells blank - be certain to enter "0" wherever required.) | | Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Sales | $ | $ | $ | $ | Cost of goods sold | | | | | | | | | | Net income | $ | $ | $ | $ | | b. | What are the cash flows for the company today and in each of the next three quarters? (Leave no cells blank - be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign.) | | Cash Flow | Quarter 1 | $ | Quarter 2 | | Quarter 3 | | Quarter 4 | | | c. | What is Ponzi’s net working capital in each quarter? (Leave no cells blank - be certain to enter "0" wherever required.) | | Net Working Capital | Quarter 1 | $ | Quarter 2 | | Quarter 3 | | Quarter 4 | | |
Explanation:
Sales occur in quarters 2 and 3, so this is when the cost of goods sold is recognized. Therefore, net income is zero

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