WF123 MBA W1 Week 1

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School

Webster University *

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5200

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Accounting

Date

Feb 20, 2024

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docx

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Week 1 – Practice Set Name: ____________________ Please type a numerical solution to the problems below: 1. Hannibal Corporations has $17,000,000 in assets and $8,000,000 in stockholder’s equity. What does Hannibal Corporation have in liabilities? a. $9,000,000 Assets $17,000,000 Stockholders’ Eq- uity $8,000,000 Liabilities $9,000,000 2. Malden Corporation has assets of $12,000,000 and liabilities of $8,000,000. What is its stockholder equity balance? a. $4,000,000 Assets $12,000,000 Liabilities $8,000,000 Stockholder Equity $4,000,000 3. Bluff Corporation has current assets of $600,000, and long-term assets of $900,000. Bluff has current liabilities of $400,000 and stockholder’s equity of $500,000. How much does Bluff have in long term liabilities? a. $600,000 Current Assets $600,000 Long Term Assets $900,000 Current Liability $400,000 Stockholder Equity $500,000 Long term liability $600,000 4. Gideon Corporation has assets of $8,000,000 and liabilities of $3,000,000 and stockholders’ equity of $5,000,000 at the beginning of the year. Over the year Gideon earns $1,500,000 in earnings and pays a dividend of $600,000 to its shareholders. If there is no other activity in the stockholder’s equity account What is its ending stockholder equity balance? a. 5,900,000 Assets $8,000,000 Liability $3,000,000 Stockholder Equity $5,000,000 Earning $1,500,000 Dividend $600,000 New Stockholder Equity $5,900,000

5. Prairie Corporation has sales of $9,000,000 in its first year of operation. During this first year of operations its variable costs of goods sold were $3,500,000 of sales. The fixed cost of goods sold was $1,400,000. Selling and administrative costs were $1,800,000 and taxes were $1,200,000. Please calculate Prairie Corporation’s after-tax income. a. $1,100,000 Sales $9,000,000 Variable Cost $3,500,000 Fixed Cost $1,400,000 Sales and Admin Cost $1,800,000 Tax $1,200,000 After Tax Income $1,100,000 6. Dexter Corporation ended the year with a net income of $800,000. Calculated in this net income number is $80,000 in depreciation expense. Over the year Dexter decreased its current assets by $75,000 and increased its current liabilities by $45,000. Additionally, Dexter invested $160,000 in plant property and equipment. What is Dexter’s free cash flow for the year? a. $840,000 Net Income $800,000 Depreciation $80,000 Current Asset Change $75,000 Liability change $45,000 New Asset $160,000 Cashflow $840,000 7. New Madrid Corporation has sales of $3,800,000 in its first year of business. Over this year variable costs of goods sold were 35% of sales. The fixed cost of goods sold was $420,000. Selling and administrative costs were $240,000 and taxes were 30% of pretax income. Please calculate New Madrid Corporation’s after-tax income. a. $1,267,000 Sales $3,800,000 Variable Cost $1,330,000 Fixed Cost $420,000 Sales and Admin Cost $240,000 Pretax Income $1,810,000 Tax $543,000 After Tax Income $1,267,000 8. Please start with the data from the prior problem concerning New Madrid Corporation. In projecting the proforma second years income statement for New Madrid, assume that sales increase by 15% in the second year of operation, variable costs of goods sold stay at 35% of sales, fixed cost of sales increase by 10% over the second year, selling and administrative cost increase by 8% and taxes remain at 30% of pretax profit. Please calculate New Madrid Corporation’s projected after-tax income for the second year of operation. a. $1,483,510 Current Year Next Year

Sales $3,800,000 $4,370,000.0 0 Variable Cost $1,330,000 $1,529,500.0 0 Fixed Cost $420,000 $462,000.0 Sales and Admin Cost $240,000 $259,200.00 Pretax Income $1,810,000 $2,119,300 Tax $543,000 $635,790 After Tax Income $1,267,000 $1,483,510 9. Caruthersville Corporation begins the year with $900,000 in plant property and equipment. This equipment is depreciated by $70,000 over the coming year. Over this same year, Caruthersville purchases additional equipment worth $90,000. What is the ending balance of the plant property and equipment account at the end of the year? a. $920,000 Asset $900,000 Depreciation $70,000 New asset $90,000 Total Asset $920,000 10. Hamon Corporation is projecting its balance sheet and it arrives at the following numbers for the coming years. At the end of year one, total assets equal $11,500,000 while total liabilities and equity equal $12,500,000. At the end of year two, total assets equal $14,000,000 and total liabilities and equity equal 13,000,000. Please indicate how much money Hamon will need to borrow money or will have left over in year one and in year two. Please indicate if the amount needs to be borrowed or is left over? Your answers will look something like this: Hamon will (will have excess cash) of $1,000,000 at the end of year one. Hamon will (need to borrow) of $$1,000,000 at the end of year two.

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