What is included in the Income Statement and NOT in the Statement of Cash Flows? -

Depreciation Expense

Computation of Net Income:

A co. sold products in 2014 for $120k and collected $100k cash and remainder in 2015. Co.

incurred $70k expenses for 2014 and paid $100k which included $30k for expenses

incurred in 2013. What is net income for 2014? - Computation of Net Income (R-E=NI)

$50,000

Net Income = $120k - $70k = $50k, or

Revenues - Expenses Incurred = Net Income

Retained Earning Statement:

The beginning retrained earnings on 1/14/14 is $25k. The NI for 2014 is $50k and the

dividend payout ratio is 25% of NI. What are retained earnings on 12/31/14? - Retained

Earning Statement:

$62,500

Retained earnings on12/31/14 =

$25k + $50k - (.25x$50k) = $62,500

Retained Earnings:

Firm reported RE of $300 in 12/31/12. For 12/31/13 firm reports RE of $400 and pays

dividends of $25. What is NI in 2013? - Retained Earnings:

Answer $125

Logic is $300 from $400 is $100 plus the $25 dividend totals out to $125.

300 + NI - 25 = 400: NI=125, so

300+125-25=400

BalanceSheet:

Basic equation for the Balance Sheet is? - Balance Sheet:

Equity = Assets - Liabilities, or it can also be seen as

Assets = Liabilities + Equity

Investment:Simple Interest:

An investment of $10k made today at 8% simple interest for 3 yrs and 9 mo. will yield in

principle and interest of? - Interest: Simple Interest

$13,000

Principal + Interest = $10,000 + (10k x .08x3.75) = $13k

Investment returns:

A stock will be worth $36 at EOY and will pay dividend of $2.25.

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