Fin419 Principles of Managerial Finance

Principles of Managerial Finance Text Problems

Tamala R. Brent

University of Phoenix

Finance for Decision Making

FIN 419

Thomas Prince

June 13, 2013

Principles of Managerial Finance Text Problems

Chap 2/P2-1

Reviewing basic financial statements - The income statement for the year ended December 31, 2009, the balance sheets for December 31, 2009 and 2008, and the statement of retained earnings for the year ended December 31, 2009, for Technical, Inc., are given on pages 82 and 83. Briefly discuss the form and informational content of each of these statements.

Answer

Income Statement:   A net profit was shown for 2006 and the ability to pay its stockholders a cash dividends.

Balance Sheet: Shows an outline of liabilities and assets for December 31, 2005 and 2006. There is a surplus of current assets over current liabilities, which show liquidity. The firm’s fixed assets 270,000 represent over one-half of total assets $408,300. The firm is financed by common stock, short/long-term debt, and retained earnings.

Statement of Retained Earnings: A net profit of $42,900 was earned in 2006, while paying out cash dividends of $20,000. The reconciliation of the retained earnings account from $50,200 to $73,100 shows the net amount of $22,900 which was retained by the firm.

Chap 4/P2-2

Financial statement account identification Mark each of the accounts listed in the

following table as follows:

a. In column (1), indicate in which statement—income statement (IS) or balance

sheet (BS)—the account belongs.

b. In column (2), indicate whether the account is a current asset (CA), current

liability (CL), expense (E), fixed asset (FA), long-term debt (LTD), revenue (R),

or stockholders’ equity (SE).

(1) (2)

Account name Statement Type of account

Accounts payable BS CL

Accounts receivable BS CA

Accruals BS CL

Accumulated depreciation BS...