1- Calculate the Net Income of ABC in 2011? *

a- $ 110,252

b- $ 99,905

c- $ 114,252

d- $ 103,090

e- None of the above

2- What is the value of COGS in 2011? *

a- $ 2,151,750

b- $ 2,526,141

c- $ 1,900,000

d- $ 2,100,000

e- None of the above

3- The expected Selling and G&A expenses in 2011 is: *

a- $ 326,478

b- $350,300

c- $ 160,000

d- $ 260,000

e- None of the above

4- The values of A/R and Inventories respectively in 2011 are expected to be: *

a- $ 442,000, $ 420,000

b- $ 463,329, $ 852,455

c- $ 440,000, $ 835,000

d- $ 420,000, $ 750,000

e- None of the above

5- The increase in Total Liabilities from 2010 till 2011 was due to the increase in: *

a- LTD

b- A/P

c- N/P

d- Interest Expense

e- None of the above

6- The Discretionary financing needs are expected to be: *

a- Zero

b- $ 56,815 surplus

c- $ 112,952

d- $ 56,815 deficit

e- None of the above

7- If the company wants to absorb the DFN through Common Equity. The value of common stock will be: *

a- $ 441,885

b- $ 578,115

c- $ 500,000

d- $ 421,885

e- None of the above

8- Ignore the elimination of DFN in the previous part. Now assume that 100,000 of the notes payable will be paid in 2011, then the balance DFN will be: *

a- $ 21,885 Deficit

b- $ 21,885 Surplus

c- $ 178,115 Deficit

d- $ 178,115 Surplus

e- None of the above

9- Refer to question 8 above, If the company want to absorb DFN through common equity, the value of common equity will be: *

a- $521,885

b- $478,115

c- $861,138

d- $740,160

e- None of the above

Use the same income statements and balance sheets given in problem 1, and presented below. In the below questions you are requested to forecast an Income statement and Balance sheet for 2011. The sales for ABC are expected to increase by 50,000$. Dividends paid are 30,000$. Tax rate is 35%. Other Current liabilities changes as sales change. ABC Company Income Statement For the Year Ended Dec. 31, 2010 2010 Sales 2,800,000 Cost of Goods Sold 2,100,000 Gross Profit 700,000 Selling and G&A Expenses 350,300 Fixed Expenses 100,000 Depreciation Expense 20.000 EBIT 229,700 Interest Expense 76,000 Earnings Before Taxes 153,700 Taxes 53,795 Net Income 99,905 2009 2,500,000 1,900,000 600,000 260.000 100,000 18,900 221,100 62,500 158,600 55,510 103,090 ABC company Balance Sheet As of Dec. 31, 2010 Assets Cash and Equivalents Account Receivable Inventory Total Current Assets Plant & Equipment Accumulated Depreciation Net Fixed Assets Total Assets Liabilities and Owner's Equity Accounts Payable Short-Term Notes Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Total Liabilities Common Stock Retained Earnings Total Shareholder's Equity Total Liabilities and Owner's Equity 2010 140,000 440,000 835,000 1,415,000 600,000 220,000 380,000 1,795,000 2009 120,000 420,000 750,000 1,290,000 510,000 200,000 310,000 1,600,000 230,000 260,000 100,000 590,000 450,000 1,040,000 500,000 255,000 755,000 1,795,000 160,000 220,000 150,000 530,000 400,000 930,000 450,000 220,000 670,000 1,600,000 Use the same income statements and balance sheets given in problem 1, and presented below. In the below questions you are requested to forecast an Income statement and Balance sheet for 2011. The sales for ABC are expected to increase by 50,000$. Dividends paid are 30,000$. Tax rate is 35%. Other Current liabilities changes as sales change. ABC Company Income Statement For the Year Ended Dec. 31, 2010 2010 Sales 2,800,000 Cost of Goods Sold 2,100,000 Gross Profit 700,000 Selling and G&A Expenses 350,300 Fixed Expenses 100,000 Depreciation Expense 20.000 EBIT 229,700 Interest Expense 76,000 Earnings Before Taxes 153,700 Taxes 53,795 Net Income 99,905 2009 2,500,000 1,900,000 600,000 260.000 100,000 18,900 221,100 62,500 158,600 55,510 103,090 ABC company Balance Sheet As of Dec. 31, 2010 Assets Cash and Equivalents Account Receivable Inventory Total Current Assets Plant & Equipment Accumulated Depreciation Net Fixed Assets Total Assets Liabilities and Owner's Equity Accounts Payable Short-Term Notes Payable Other Current Liabilities Total Current Liabilities Long-Term Debt Total Liabilities Common Stock Retained Earnings Total Shareholder's Equity Total Liabilities and Owner's Equity 2010 140,000 440,000 835,000 1,415,000 600,000 220,000 380,000 1,795,000 2009 120,000 420,000 750,000 1,290,000 510,000 200,000 310,000 1,600,000 230,000 260,000 100,000 590,000 450,000 1,040,000 500,000 255,000 755,000 1,795,000 160,000 220,000 150,000 530,000 400,000 930,000 450,000 220,000 670,000 1,600,000