Impact Of Net Income On A Firm S Balance Sheet Conrad Air

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Credit card balance

2,000

Real estate

150,000

Personal loan

3,000

a. Create a personal balance sheet as of December 31, 2009. It should be similar to a corporate balance sheet.

b. What must the total assets of the Adams family be equal to by December 31, 2009?

c. What was their net working capital (NWC) for the year? {Hint: NWC is the difference between total liquid assets and total current liabilities.)

Impact of net income on a firm's balance sheet Conrad Air, Inc., reported net income of $1,365,000 for the year ended December 31, 2009. Show the effect of these funds on the firm's balance sheet for the previous year (top of page 86) in each of the scenarios following the balance sheet.

■' ■'■:.. 'v1;.- ■ V .v.'ci/':'Conrad Air, Inc. ;1;V'.'/.'..V -'S'\ ;.■'.lAssets.-;.','A/'.,' ■ -i;;■■';:'X-■■,-Î .' y^;':'vi'; \v/':l^Li^ilities',ahcE Stockholders' Equityi;f^¿v;V

Cash

$ 120,000

Accounts payable

$ 70,000

Marketable securities

35,000

Short-term notes

55,000

Accounts receivable

45,000

Current liabilities

$ 125,000

Inventories

130,000

Long-term debt

$2,700,000

Current assets

$ 330,000

Total liabilities

$2,325,000

Equipment

$2,970,000

Common stock

$ 500,000

Buildings

1,600,000

Retained earnings

1,575,000

Fixed assets

$4,570,000

Stockholders' equity

$2,075,000

Total assets

$4,900,000

Total liabilities and equity

$4,900,000

a. Conrad paid no dividends during the year and invested the funds in marketable securities.

b. Conrad paid dividends totaling $500,000 and used the balance of the net income to retire (pay off) long-term debt.

c. Conrad paid dividends totaling $500,000 and invested the balance of the net income in building a new hangar d. Conrad paid out all $1,365,000 as dividends to its stockholders.

Initial sale price of common stock Beck Corporation has one issue of preferred stock and one issue of common stock outstanding. Given Beck's stockholders' equity account that follows, determine the original price per share at which the firm sold its single issue of common stock.

Preferred stock S 125

Common stock ($0.75 par; 300,000 shares outstanding) ' 225

Paid-in capital in excess of par on common stock 2,625

Retained earnings 900

Total stockholders' equity $3,375

fli^E'l Statement of retained earnings Hayes Enterprises began 2009 with a retained earnings balance of $928,000. During 2009, the firm earned $377,000 after taxes. From this amount, preferred stockholders were paid $47,000 in dividends. At year-end 2009, the firm's retained earnings totaled $1,048,000. The firm had 140,000 shares of common stock outstanding during 2009.

a. Prepare a statement of retained earnings for the year ended December 31, 2009, for Hayes Enterprises. (Note: Be sure to calculate and include the amount of cash dividends paid in 2009.)

b. Calculate the firm's 2009 earnings per share (EPS).

c. How large a per-share cash dividend did the firm pay on common stock during 2009?

Changes in stockholders' equity Listed are the equity sections of balance sheets for years 2008 and 2009 as reported by Mountain Air Ski Resorts, Inc. The overall value of stockholders' equity has risen from $2,000,000 to $7,500,000. Use the statements to discover how and why this happened.

jliSij^

Common stock ($1.00 par) Authorized—5,000,000 shares

Outstanding—1,500,000 shares 2009 $1,500,000

Paid-in capital in excess of par 500,000 4,500,000

Retained earnings 1,000,000 1,500,000

Total stockholders' equity $2,000,000 $7,500,000

The company paid total dividends of $200,000 during fiscal 2009.

a. What was Mountain Air's net income for fiscal 2009?

b. How many new shares did the corporation issue and sell during the year?

c. At what average price per share did the new stock sold during 2009 sell?

d. At what price per share did Mountain Air's original 500,000 shares sell?

P2-12 Ratio comparisons Robert Arias recently inherited a stock portfolio from his uncle. Wishing to learn more about the companies in which he is now invested, Robert performs a ratio analysis on each one and decides to compare them to each other. Some of his ratios are listed below.

'Ratio-I'ri^ii.i^fiii]

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Responses

  • bellisima
    What was Mountain Air’s net income during fiscal 2009?
    8 years ago
  • REAGAN
    How to determine the "original price per share" by stockholders' equity?
    8 years ago
  • Maik Gaertner
    What is the Net Working Capital for the firm on 12/31/09?
    8 years ago
  • elizabeth
    How do impact a firm''s income?
    8 years ago
  • fiori
    What was mountain air ski resorts inc net income for fiscal year?
    7 years ago
  • germana
    What is the impact on New Income if the firm had no debt?
    7 years ago
  • amethyst lothran
    How large per share cash dividend did the firm pay on common stock during 1995?
    7 years ago

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