For the four years ended December 31, 2004 (in 000s except per share amounts) 2004 2003 2002 2001 Net Revenues and Gains $27,500 $26,300 $25,100 $20,900 Expenses and Losses Cost of Sales 15,200 12,150 9,845 9,200 Operating Expenses 3,160 3,075 2,890 2,300 Other 4,570 3,966 3,146 2,214 Taxes 1,690 2,671 3,318 2,515 Net Income $2,880 $4,438 $5,901 $4,671 Common Shares Outstanding 3,000 3,000 3,000 3000 Q 3 Assume Victor Hines LLP breached the duty of care o wed to the Bank of Green Valley Were the damages sustained by the Bank of Green Valley caused by Victor Hiness breach of the duty of care In answering this question do the following correct the 2004 income statement using the analysis in question 2 above Perform ratio analysis on the four years income (as originally stated and then after your corrections in requirement A) to determine if the firm actually had a pattern of income stability Calculate standard profitability ratios (Return on Sales, Gross Profit Margin, Earnings per share, plus any other analysis you wish to perform) Additional information ZonTech was carrying the investment at $5,100,000 and sold it to GreenSel for $8,000,000 So they booked a $2,900,000 gain on the transaction, Michael confidentially replied Q2) Assuming Victor Hines LLP owed a duty of care to the Bank of Green Valley, did Victor Hines, LLP breach that duty of care In determining whether a breach occurred, make sure to perform the following accounting analysis Recreate the journal entry that ZonTech made when it sold the stock to GreenSel How much gain was recognized on the sale of the stock How much cash inflow did this transaction create for ZonTech Calculate the present value of the note receivable using a 15 interest rate Using the present value of the note as the only economic benefit received, recalculate the gain or loss on the transaction At the end of the year Zon Tech would have had to declare interest receivable on the note this would set off alarms as to where is the note payable

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For the four years ended December 31, 2004 (in 000s except per share amounts) 2004 2003 2002 2001 Net Revenues and Gains $27,500 $26,300 $25,100

For the four years ended December 31, 2004

(in 000s except per share amounts)

2004 2003 2002 2001

Net Revenues and Gains $27,500 $26,300 $25,100 $20,900

Expenses and Losses

Cost of Sales 15,200 12,150 9,845 9,200

Operating Expenses 3,160 3,075 2,890 2,300

Other 4,570 3,966 3,146 2,214

Taxes 1,690 2,671 3,318 2,515

Net Income $2,880 $4,438 $5,901 $4,671

Common Shares Outstanding 3,000 3,000 3,000 3000

Q. 3.Assume Victor Hines LLP breached the duty of care owed to the Bank of Green Valley. Were the damages sustained by the Bank of Green Valley caused by Victor Hiness breach of the duty of care? In answering this question do the following:

correct the 2004 income statement using the analysis in question 2 above.
Perform ratio analysis on the four years income (as originally stated and then after your corrections in requirement A) to determine if the firm actually had a pattern of income stability. Calculate standard profitability ratios (Return on Sales, Gross Profit Margin, Earnings per share, plus any other analysis you wish to perform).

Additional information:

ZonTech was carrying the investment at $5,100,000 and sold it to GreenSel for $8,000,000. So they booked a $2,900,000 gain on the transaction, Michael confidentially replied.

Q2) Assuming Victor Hines LLP owed a duty of care to the Bank of Green Valley, did Victor Hines, LLP breach that duty of care? In determining whether a breach occurred, make sure to perform the following accounting analysis:

Recreate the journal entry that ZonTech made when it sold the stock to GreenSel. How much gain was recognized on the sale of the stock? How much cash inflow did this transaction create for ZonTech

Calculate the present value of the note receivable using a 15% interest rate. Using the present value of the note as the only economic benefit received, recalculate the gain or loss on the transaction. At the end of the year Zon Tech would have had to declare interest receivable on the note this would set off alarms as to where is the note payable.