Given the data shown in Tables P2.1 and P2.2 (on pp. 40-42 of your textbook) for Pegasus International, Inc., what method of accounting is being used? How has the working capital of Pegasus International changed from 20X4 to 20X5? Interpret this development considering the increase in revenue from 20X4 to 20X5.

40 UNDERSTANDING FINANCIAL STATEMENTS 4. The following data regarding Atlas Construction Company are aa TABLE P27b Pegas Current assets $300,000 Current liabilities Long-term liabilities Total net worth 200,000 500,000 200,000 Current assets 5. Name three accounts typical of the liability side of a Balance Shee. In 6. How are the Balance Sheet and Income Statement related? Discuss the 7. Given the data shown in Tables P2.7a and P2.7b for Pegasus Interna- What is the value of the company's fixed assets? what side would you enter "discounts earned?" pattern of information flow between these two documents. tional, Inc., what method of accounting is being used? How has the working capital of Pegasus International changed from 20X4 to 20X5? Interpret this development considering the increase in revenue from 20X4 to 20X5. Property, plant. and equipment at cost TABLE P2.7a Pegasus International, Inc., Summary of Consolidated Operations (Dollar Amounts and Shares Are in Thousands, Except Per Share Amounts) Revenue Costs and expenses Cost of revenue Corporate administrative and 20x5 81,325,423 1.211,402 20X4 8801,322 726,937 19,392 14,881 general expenses Other (income) and expenses Interest on indebtedness Interest income Provision for estimated losses on 1.671 -7,089 400 Oil and gas properties at cost 1,354 -6,565 planned disposition of assets Other assets Total cost and expenses Earnings before income taxes Total income taxes Net earnings Preferred dividend requirements Earnings applicable to common 1,225,583 99,480 52,429 47,411 1,803 $45,608 736,800 64,522 31,277 33,245 1.558 831,687 Total stock 40 UNDERSTANDING FINANCIAL STATEMENTS 4. The following data regarding Atlas Construction Company are aa TABLE P27b Pegas Current assets $300,000 Current liabilities Long-term liabilities Total net worth 200,000 500,000 200,000 Current assets 5. Name three accounts typical of the liability side of a Balance Shee. In 6. How are the Balance Sheet and Income Statement related? Discuss the 7. Given the data shown in Tables P2.7a and P2.7b for Pegasus Interna- What is the value of the company's fixed assets? what side would you enter "discounts earned?" pattern of information flow between these two documents. tional, Inc., what method of accounting is being used? How has the working capital of Pegasus International changed from 20X4 to 20X5? Interpret this development considering the increase in revenue from 20X4 to 20X5. Property, plant. and equipment at cost TABLE P2.7a Pegasus International, Inc., Summary of Consolidated Operations (Dollar Amounts and Shares Are in Thousands, Except Per Share Amounts) Revenue Costs and expenses Cost of revenue Corporate administrative and 20x5 81,325,423 1.211,402 20X4 8801,322 726,937 19,392 14,881 general expenses Other (income) and expenses Interest on indebtedness Interest income Provision for estimated losses on 1.671 -7,089 400 Oil and gas properties at cost 1,354 -6,565 planned disposition of assets Other assets Total cost and expenses Earnings before income taxes Total income taxes Net earnings Preferred dividend requirements Earnings applicable to common 1,225,583 99,480 52,429 47,411 1,803 $45,608 736,800 64,522 31,277 33,245 1.558 831,687 Total stock