Question

For Question 1 through 4, see the following financial information (Income Statement and balance Sheet) for Thornton Company for the years ending December 31, 1998 and 1999.

         

1998                            1999

Notes Payable                                                             $250,000                     $220,000           

Inventories                                                                  $430,000                     $390,000

Long-term Investment                                                $70,000                       $80,000

Sales                                                                           $2,500,000                  $2,900,000

Corporate Bond                                                          $580,000                     $650,000

Annual Depreciation                                                  $100,000                     $110,000

Excess Paid in Capital                                                $100,000                     $130,000

Taxes                                                                          $70,000                       $90,000

Cash                                                                                        ??                          ??                  

Accumulated Depreciation                                         $200,000                     $310,000

Accounts Payable                                                       $540,000                     $500,000

Costs of Good Sold                                                    $1,800,000                  $2,000,000

Interest Expenses                                                        $80,000                       $90,000

Retained Earnings                                                      $180,000                     $210,000

Common Stock ($1 par)                                             $100,000                     $150,000

Gross Plant & Equipment                                           $1,100,000                  $1,410,000

Selling & Administrative Expense                             $400,000                     $500,000

Accounts Receivable                                                  $180,000                     $230,000

Marketable Securities                                                 $20,000                       $20,000

Accrued Expenses                                                      $70,000                       $50,000

R&D Expense                                                             $98,000                       $165,000           

1. What is firm’s Net Income in 1999?

2. What is the balance of Cash account in 1998 and 1999?

3. What is the total amount of firm’s current assets and current liabilities in 1998 and 1999?

4. What is the total equity in 1998 and 1999?

Answer 1

Part 1 - Net income

Thornton Company
Income Statement
For the period Dec. 31, 1998 and 1999 (amounts in $)
	1998	1999
sales	2500000	2900000
cost of goods sold	-1800000	-2000000
gross profit	700000	900000
expenses:
selling expenses	-400000	-500000
R&D expenses	-98000	-165000
depreciation	-100000	-110000
operating income	102000	125000
interest expense	-80000	-90000
earnings before tax	22000	35000
taxes	-70000	-90000
net income (loss)	-48000	-55000

The line items are highlighted

Part 2 - cash balance

Part 3 - total current assets

Part 4 - stockholders equity

Thornton Company
Balance Sheet
As of Dec. 31, 1998 and 1999
Amounts in $
cash (difference between total liabilities and stockholder and remaining assets) Part 2	220000	90000
marketable securities	20000	20000
accounts receivable	180000	230000
inventories	430000	390000
total current assets Part 3	850000	730000
gross plant equipment	1100000	1410000
less depreciation	-200000	-310000
net plant and equipment	900000	1100000
long-term investment	70000	80000
total non-current assets	970000	1180000
total assets	1820000	1910000
Liabilities and stockholders equity
notes payable	250000	220000
accounts payable	540000	500000
accrued expenses	70000	50000
total current liabilities	860000	770000
non-current liabilities:
corporate bond	580000	650000
total non-current liabilities	580000	650000
stockholders equity: Part 4
common stock	100000	150000
excess paid incapital	100000	130000
retaind earnings	180000	210000
total stockholders equity	380000	490000
total liabilities and stockholders equity	1820000	1910000