Problem 2-1: Preparing Financial Statements
Problem 2-2: Preparing the Statement of Cash Flows

*Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit; no hard keys.

Problem 2-1: Preparing Financial Statements

Information below is for Warner Manufacturing, Inc. for the year ended December 31, 20×1 except where beginning of year numbers indicated. All amounts in SAR unless otherwise stated.

Using the information below:

  1. Prepare an income statement with the proper title
  2. Prepare end of year balance sheet with the proper title
  3. Calculate net working capital
  4. Calculate the debt ratio

*Complete the problems in an Excel spreadsheet. Be sure to show your work to receive credit; no hard keys.

DATA

Depreciation expense

66,000

Cash

220,000

Long-Term Debt

330,000

Net Sales

615,000

Accounts payable

102,000

Marketing and general and administrative expenses

79,000

Buildings and Equipment

895,000

Notes payable

7,5000

Accounts receivable

156,000

Interest expense

4,750

Accrued expenses

7,900

Common Stock

289,000

Cost of Goods sold

297,000

Inventory

99,300

Taxes

67,300

Accumulated Depreciation

-26,3000

Prepaid expenses

14,500

Taxes payable

55,000

Retained earnings

262,900

Problem 2-2 Preparing Statement of Cash Flows

Given the following information, prepare a statement of cash flows.

DATA

Increase in accounts receivable

30

Increase in inventories

30

Operating Income

95

Interest Expense

30

Increase in accounts payable

25

Dividends

15

Increase in common stock

20

Increase in net fixed assets

23

Depreciation Expense

12

Income taxes

17

Beginning cash

20

Assume all amounts are in 000’s SAR.

Sample Solution

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