1. Use the Income Statement and the Balance Sheet in Tables 2.3 and 2.4 to complete the Purcell Diagram for the Financial Flows for the Shawnee Corporation in Figure 2.2. The equipment purchased during the year was 70 and the labor was the same as 2020. Fill in the blanks in Table 2.4 and in the Purcell Diagram of Figure 2.2. Table 2.3: Income statement for Shawnee Corporation for 2021 Income Statement Shawnee Corporation 2021 (End-of-Year) Sales 655 Expenses Cost of Goods Sold 285 Management Costs R&D Expenses Sales Expense 40 60 70 Other Taxes & Fees 20 Depreciation 60 535 Profit Before Tax 120 Taxes (Tax Rate 25%) 30 Net Profit 90 Table 2.4: Balance sheet for Shawnee Corporation for 2021 Balance Sheet Shawnee Corporation (Year 2021) Start End Start End 2021 2021 2021 2021 Liabilities & Equities Assets Current Assets Current Liabilities (1) Accounts Payable Cash 290 20 30 Accounts Receivables 40 60 Inventories Finished Goods 25 30 Work-in-Progress 80 85 Raw Materials 30 40 Owner's Equity Fixed Assets Plant & Equipment (2) Common Stock (4) (5) 110 (3) 575 (6) 575 (1) Customers Cash 290/_(2) (3) Accounts Accounts Suppliers (4)/ Receivable Payable 20/30 655 |Sales 40/60 Depreciation (15) Purchased Equipment (5) Fixed Assets Total 110/120 Costs (6) 7200 Finished Goods WIP Raw Materials (9) 80/ (7) 285 25/30 (8) 30/50 COGS 30 20 (10) 70 Employees 40 40 Management 60 60 R&D Expenses 70 70 Sales Expenses 20 20 Fees & Other Taxers (14)_ (11) Government Income Taxes Net Profits (12)+_ (13). Owner's Equity 575/655 Net Net Profits -20 Dividends Paid to Stockholders Equity Change 20 Value +90 Created (+10 10 Stock Sales Figure 2.2: Purcell diagram for Shawnee Corporation in 2021. 2. FINANCIAL STATEMENTS AND THE PURCELL DIAGRAM 16 costs have also increased greatly due to cybersecurity threats. The example income statement for Shawnee Corporation with some of these components is presented in Table 2.1. Table 2.1: Income statement for Shawnee Corporation in 2020 Income Statement Shawnee Corporation 2020 (End-of-Year) 620 Sales Expenses Cost of Goods Sold 290 Management Costs R&D Expenses Sales Expense 40 60 70 Other Taxes & Fees 20 Depreciation 40 520 Profit Before Tax 100 Taxes (Tax Rate 25%) 25 Net Profit 75 The balance sheet indicates the financial positions of the company at the beginning and at the end of the accounting period to show the progress during the year. The basic equation of the balance sheet is that: Assets = Liabilities + Equities (2.1) The relationship between cash flows and profits developed in Chapter 1 was: Cash Flows = Net Profits + Depreciation (2.2) The more inclusive relationship between cash flows and profits is written as indicated by Equa- tion (2.3) as: Cash Flows = Net Profits + Depreciation + Adjustments (2.3) The adjustments to the cash flows are the accounts receivable, accounts payable, new cquipment purchases, dividends paid, stock sales, and inventory changes and other items not included in the profit calculations. These adjustments can have a major impact on the cash flows and are considered in this chapter, but the long-term debt, short-term debt, principal, and in- terest payments are not included at this level of development. However, these can be included in the analysis in more advanced models. The balance sheet for Shawnee Corporation is shown in Table 2.2. 1. Use the Income Statement and the Balance Sheet in Tables 2.3 and 2.4 to complete the Purcell Diagram for the Financial Flows for the Shawnee Corporation in Figure 2.2. The equipment purchased during the year was 70 and the labor was the same as 2020. Fill in the blanks in Table 2.4 and in the Purcell Diagram of Figure 2.2. Table 2.3: Income statement for Shawnee Corporation for 2021 Income Statement Shawnee Corporation 2021 (End-of-Year) Sales 655 Expenses Cost of Goods Sold 285 Management Costs R&D Expenses Sales Expense 40 60 70 Other Taxes & Fees 20 Depreciation 60 535 Profit Before Tax 120 Taxes (Tax Rate 25%) 30 Net Profit 90 Table 2.4: Balance sheet for Shawnee Corporation for 2021 Balance Sheet Shawnee Corporation (Year 2021) Start End Start End 2021 2021 2021 2021 Liabilities & Equities Assets Current Assets Current Liabilities (1) Accounts Payable Cash 290 20 30 Accounts Receivables 40 60 Inventories Finished Goods 25 30 Work-in-Progress 80 85 Raw Materials 30 40 Owner's Equity Fixed Assets Plant & Equipment (2) Common Stock (4) (5) 110 (3) 575 (6) 575 (1) Customers Cash 290/_(2) (3) Accounts Accounts Suppliers (4)/ Receivable Payable 20/30 655 |Sales 40/60 Depreciation (15) Purchased Equipment (5) Fixed Assets Total 110/120 Costs (6) 7200 Finished Goods WIP Raw Materials (9) 80/ (7) 285 25/30 (8) 30/50 COGS 30 20 (10) 70 Employees 40 40 Management 60 60 R&D Expenses 70 70 Sales Expenses 20 20 Fees & Other Taxers (14)_ (11) Government Income Taxes Net Profits (12)+_ (13). Owner's Equity 575/655 Net Net Profits -20 Dividends Paid to Stockholders Equity Change 20 Value +90 Created (+10 10 Stock Sales Figure 2.2: Purcell diagram for Shawnee Corporation in 2021. 2. FINANCIAL STATEMENTS AND THE PURCELL DIAGRAM 16 costs have also increased greatly due to cybersecurity threats. The example income statement for Shawnee Corporation with some of these components is presented in Table 2.1. Table 2.1: Income statement for Shawnee Corporation in 2020 Income Statement Shawnee Corporation 2020 (End-of-Year) 620 Sales Expenses Cost of Goods Sold 290 Management Costs R&D Expenses Sales Expense 40 60 70 Other Taxes & Fees 20 Depreciation 40 520 Profit Before Tax 100 Taxes (Tax Rate 25%) 25 Net Profit 75 The balance sheet indicates the financial positions of the company at the beginning and at the end of the accounting period to show the progress during the year. The basic equation of the balance sheet is that: Assets = Liabilities + Equities (2.1) The relationship between cash flows and profits developed in Chapter 1 was: Cash Flows = Net Profits + Depreciation (2.2) The more inclusive relationship between cash flows and profits is written as indicated by Equa- tion (2.3) as: Cash Flows = Net Profits + Depreciation + Adjustments (2.3) The adjustments to the cash flows are the accounts receivable, accounts payable, new cquipment purchases, dividends paid, stock sales, and inventory changes and other items not included in the profit calculations. These adjustments can have a major impact on the cash flows and are considered in this chapter, but the long-term debt, short-term debt, principal, and in- terest payments are not included at this level of development. However, these can be included in the analysis in more advanced models. The balance sheet for Shawnee Corporation is shown in Table 2.2