Problem 2-6 Problem 2-8 Problem 2-21
Spreadsheet Templates
Review of Accounting
Spreadsheet Templates by Block, Hirt and Danielsen
Copyright © 2011 McGraw-Hill/Irwin and ANSR Source India Pvt Ltd. (www.ansrsourceindia.com)
Foundations of Financial Management
MAIN MENU – CHAPTER 2
Problem 2-6
Objective: Income statement
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Given the following information prepare in good form an income statement for the Dental Drilling Company
Selling and administrative expense $60,000
Depreciation expense 70,000
Sales 470,000
Interest expense 40,000
Cost of goods sold 140,000
Taxes 45,000
Foundations of Financial Management
Block, Hirt and Danielsen
Solution
Problem 2-6
Instructions
Enter data and formulas to complete the Income Statement template below.
Sales $470,000
Cost of goods sold 140,000
Gross profit $330,000
Selling and administrative expense 60,000
Depreciation expense 70,000
Operating profit $200,000
Interest expense 40,000
Earnings before taxes $160,000
Taxes 45,000
Earnings after taxes $115,000
Income Statement
Dental Drilling Company
Problem 2-8
Objective: Determination of profitability
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Prepare in good form an income statement for ATM Cards, Inc. Take your calculations all the way to
computing earnings per share.
Sales $800,000
Shares outstanding 100,000
Cost of goods sold 300,000
Interest expense 20,000
Selling and administrative expense 40,000
Depreciation expense 30,000
Preferred stock dividends 80,000
Taxes 110,000
Foundations of Financial Management
Block, Hirt and Danielsen
Solution
Problem 2-8
Instructions
Enter data and formulas to complete the Income Statement template below.
Sales $800,000
Cost of goods sold 300,000
Gross profit $500,000
Selling and administrative expense 40,000
Depreciation expense 30,000
Operating profit 430,000
Interest expense 20,000
Earnings before taxes 410,000
Taxes 110,000
Earnings after taxes 300,000
Preferred stock dividends 80,000
Earnings available to common stockholders 220,000
Shares outstanding 100,000
Earnings per share $2.20
Income Statement
ATM Cards, Inc.
Problem 2-21
Objective: Depreciation and Cash flow
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The Jupiter Corporation has a gross profit $700,000 and $240,000 in depreciation expense.
The Saturn Corporation also has $700,000 in gross profit, with $40,000 in depreciation expense.
Selling and administrative expense is $160,000 for each company.
Given that the tax rate is 40 percent, compute the cash flow for both companies.Explain the
difference in cash flow between the two firms.
Foundations of Financial Management
Block, Hirt and Danielsen
Solution
Problem 2-21
Instructions
Complete the template below by entering data and formulas to calculate the cash flow.
Jupiter Saturn
Gross profit $700,000 $700,000
Selling and adm. Expense 160,000 160,000
Depreciation 240,000 40,000
Operating profit $300,000 $500,000
Taxes (40%) 120,000 200,000
Earnings after taxes $180,000 $300,000
Plus depreciation expense $240,000 $40,000
Cash flow $420,000 $340,000
Explain the difference in cash flow between the two firms.
Jupiter had $200,000 more in depreciation which provided $80,000 (0.40 × $200,000) more in cash flow.