1) A company buys 2mm items for $3 each and sells 1mm of those items during a

year for $6 each. Marketing expenses are $200k for the year. The company has

$3mm of debt with a 5% interest rate. Its depreciation expense for the year is

$100k. The company's income tax rate is 30%. Make or show an income statement for the

company. Also, what is EBITDA?

12) You sign up for a health club and pay a $100 initiation fee for a 2 year

membership.

a) What happens to the company's balance sheet immediately after?

b) When should they recognize the $100 revenue?

13)

a) On June 15

th

, a company sells $1mm of clothing that cost them $600k to Macy's

with 30 day terms. How does this affect the company's balance sheet and income

statement on June 30

th

?

b) What happens to the company's balance sheet and income statement in July after

Macy's pays them the $1mm?

14) Which of the following are parts of cost of goods sold for General Motors?

Cash paid to purchase assembly line manufacturing machines

Cost of steel and aluminum

Salaries of assembly line workers

Salaries of marketing/advertising people

Interest expense on bonds

Cost of insurance for headquarters

Federal income tax

Salary of CFO