Is the company’s net income the amount stated by the owner?Is the company a good investment? Why or why not? Cite at least two reasons for your answer. 11:05< Chapter 6 Multiple Step Income Stmt.do...Chapter 6 -Multiple Step Income StatementA friend mentions he has a new company, SwedishDesigns, and is looking for investors. He just started businessthis September and tells you that the company has already made$36,700 in just the first month of business. He encourages youto invest before all the stock in the company is gone. The nextday you call the company's accountant to obtain the financialinformation. You are provided with the following information.You decide to prepare a multiple-step income statement withthe data.Sales revenueSales returns & allowancesSales discountsCOGSInterest revenueInterest expense$706,000 Salaries & wages expense* 109,50015,00028,0008,50050,9002,100Dashboard15,000 Rent expense*4,000 Depreciation expense*540,000 Utilities expense*8,000 Gain on sale of land6,100 Loss from employee strike*Expenses are 60% selling and 40% administrativeAfter preparing the multiple-step income statement answer thefollowing questions:1. Is the company's net income the amount stated by theowner?2. Is the company a good investment? Why or why not?000000CalendarTo DoNotifications271Inbox 11:05Chapter 6 Multiple Step Income Stmt_s...Sheet2 Sheet1Sales revenuesLess: Sales returnes & allowancesSales discountsSwedish DesignsIncome StatementFor the Month Ended September 30, 20XXNet salesCost of goods soldGross profitOperating expensesSellingSalaries & wages expenseDepreciation expenseRent expenseUtilities expenseTotal selling expensesGeneral and administrativeSalaries & wages expenseDepreciation expenseRent expenseUtilities expenseTotal general and administrative exp.Total operating expensesIncome/(Loss) from operationsOther revenue/(expenses)Gain on sale of landInterest revenueInterest expenseLoss from employee strikeNet incomeDashboard000000CalendarTo Do15,0004,00065,70016,8009,0005,10043,80011,2006,0003,40050,9008,000-6,100-2,100Notifications706,00019,000687,000540,000147,00096,60064,400161,000-14,00050,70036,700271Inbox

As seen in the above Income statement, Net Income is equal to $36,700 as stated by the Owner. Hence,…

Answered: 1. Is the company's net income the…

Business

Accounting

1. Is the company's net income the amount stated by the owner? 2. Is the company a good investment? Why or why not?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter2: Analysis Of Financial Statements

Section: Chapter Questions

Problem 15PROB

See similar textbooks

Similar questions

Part 1. Doon opened a shop on 1 December 20X0 with capital of £10,000. In her first year of trading she made a net profit of £95,000. She injected additional capital of £20,000 in the year and withdrew monthly amounts of £4,500 for her living expenses. She also took goods from stock which cost £15,000 and had a selling price of £18,500.What was Doon 's closing capital at 30 November 20X12A. £52,500 B. £56,000 C. £71,000 D.£105,500Part 2. Tal plc has £1,500,000 equity share capital in 50p shares at 1 January 20X3 and issues 1 million new equity 50p shares on 1 April 20x3.On 1 March 20X3 Tal plc pays a dividend of 10p per share, and on 1 September 20x3 the company pays a dividend of 5p per share.What are the total equity dividends paid by Tal plc in the year ended 31 December 20X3?A £250,000 B. £275,000 C. £350,000 D £500,000
Problem 1 (40%)Follows Panther Corp. Financial Report. presented in thousands of $ (.000) (the statement on image below)a. How is Panther Corp's liquidity position in 2008?b. Has the management of Panther Corp managed the company's assets to generate income properly and efficiently?c. What are the factors driving the increased profitability of Panther corp?d. Can you explain the significant increase in dividends for 2008? Problem 2 (20%) MNM Corp. Having Outstanding Sales Days at 40 days, MNM's Annual Sales are $ 8,400,000. What is the Accounts Receivable balance? Assume 1 year 365 days. Problem 3 (20%) Jazz Juzs has total assets of $ 10 billion, $ 1 billion current liabilities, and $ 3 billion of long-term debt and $ 6 billion of common stock. Jazz Juzs has 800 million shares of common stock outstanding and a share price of $ 32 per share. What is Jas Juzs market / book ratio? Problem 4 (20%) Kabul Mining's current year sales of $ 6 million, ROE of 12%, total assets turnover ratio of…
creat a balence sheet Assume all 12 months have 30 days to make the calculations easier. This is commonly done in the business world. a. Beginning cash balance on January 1, 20xx is projected to be $25,000. This money was raised through issuing common stock and should be recorded accordingly. b. All Sales are on account. Sales are as follows: January: $1,406,095; February: $1,645,258; and March: $1,884,420. c. Customers paid in cash each month as follows: Utilities bills are as follows: January, $478,072; February, $1,037,460; and March, $1,481,309. d. Direct material packets costing $145 each are purchased on the first day of January and payable immediately, $327,600. e. Direct material packets costing $144 each are purchased on account as follows: January (due in February), $251,641; February, $313,445; and March, $350,280. Direct materials are payable in the month after the purchase. f. Direct Labor (production employee wages) are paid as follows: January, $252,588;…
QUESTION ONE As a fresh graduate from the school of business at Mulungushi University, you have just been employed by an emerging successful entrepreneur, a Mr. Kyambalesa, as his Accountant.Kyambalesa is a retail grocer involved in buying and selling of goods. You have discovered that Kyambalesa together with one of his clerical employee had just completed preparing accounts for the year ended 31 December 2022. The accounts reveal a profit of K305,000= You have just gone through the accounts and other related documents and discovered the following: 1. Mr. Kyambalesa withdrew goods from his business for domestic use valued at K10,000 purchase cost. He makes a profit of 25% on cost. Kyambalesa recorded this withdrawal in the accounts as a sale to himself at cost (K10,000). 2. You discover that there was a further withdrawal of goods for domestic use valued at K2,000 cost, which was never recorded in the accounts and therefore did not affect the profit of K305,000 in any way. 3. Mr.…
Nicole has decided that she is going to start her business, Nicole’s Getaway Spa (NGS). A lot hasto be done when starting a new business. Here are some transactions that have occurred prior toApril 30.a. Received $80,000 cash when issuing 8,000 new common shares.b. Purchased land by paying $2,000 cash and signing a note payable for $7,000 due in threeyears.c. Hired a new aesthetician for a salary of $1,000 a month, starting next month.d. NGS purchased a company car for $18,000 cash (list price of $21,000) to assist in runningerrands for the business.e. Bought and received $1,000 in supplies for the spa on credit.f. Paid $350 of the amount owed in ( e ).g. Nicole sold 100 of her own personal shares to Raea Gooding for $300.Required:1. For each of the events, prepare journal entries if a transaction exists, checking that debitsequal credits. If a transaction does not exist, explain why there is no transaction.2. Assuming that the beginning balances in each of the accounts are zero,…
W7 Q3 Smith Company is a firm specializing in financial advice for retired individuals. After some analysis, you have determined that an earnings multiplier of 7 is appropriate for this type of business. Smith’s most recent earnings totaled $261,000 and earnings per share was $5.60. What is the estimated value of the firm based on the earnings multiplier?
multiple choice question The business hires an office manager at $700 a week. The immediate effect on the accounting equation is to: increase equity by $700 and decrease the asset cash by $700. decrease the asset cash by $700 and decrease equity by $700. no effect as this is not a business transaction. increase wages by $700 and decrease equity by $700.
Q3 James Collier left his job at a large corporation where he had worked as a senior accountant. He was getting $82000 as yearly salary. He established his own J.C. Accounting firm. J.C. Accounting earned total revenue $680000 in first year. The material cost was $49000; costs for rented equipment were $30000, salary given to the security man was $18800 and wages given to workers were $158229 in a year. The interest forgone for the invested funds was $22000 per year. James Collier estimated his entrepreneurial talent was worth $19850 per year. He was also offered $26985 per year to train employees in another firm. Two students assist him managing his account books for which they are paid $6550 each per year. Find accounting profits and economic profits for J.C. Accounting firm. Should James Collier stay in his business? Why? Explicit costs = Implicit costs = Economic costs = Accounting…
Question 2Alex is currently considering to invest his money in one of the companies between Company A and Company B. The summarized final accounts of the companies for their last completed financial year are as follows: a. Calculate the following ratios for Company A and Company B. State clearly the formulae used for each ratio: i. Gross Profit Marginii. Net Profit Marginiii. Inventory Turnover Period (days)iv. Receivables Collection Period (days)
B 11. If you are the controller of an arena, such as Madison Square Garden and receive $10,000 in tickets sales today for a Beyoncé Concert that will take place in 6 months. How do we record this transaction on the integrated financial statement framework (Excel Spreadsheet)?Explain. Why do major companies use accrual accounting? Explain in detail.
Question 2 Alex is currently considering to invest his money in one of the companies between Company A and Company B. The summarized final accounts of the companies for their last completed financial year are as follows: Refer to the pic attached. Based on the pic, Part (a) Gross Profit Margin Net Profit Margin Inventory Turnover Period (days) Receivables Collection Period (days) Payables Payment Period (days) Current Ratio Quick Ratio Required: b. Comment on each of the ratios calculated in part (a) above.
QUESTION 18 Calculate the accounting profit and economic profit for each of the following firms (amounts are in millions of dollars). Which answer is correct? Apple BP Tesla Sales $40,091 $5,730 $2,750 Wages and salaries $29,052 $4,932 $500 Cost of equity capital $12,100 $750 $35 Interest on debt $7,585 $275 $5 Cost of materials $6,500 $556 $1,650 Accounting profit Economic profit a. Accounting profit $6,954 $967 $695 Economic profit -$5,146 $217 $660 b. Accounting profit -$3,046 -$33 $595 Economic profit -$15,146 -$783 $560 c. Accounting profit -$15,146 -$783 $560 Economic profit -$3,046 -$33 $595 d. Accounting profit -$3,046 -$33 $595 Economic profit -$5,146 -$283 $1060 e. Accounting profit -$5,146 $217 $660…