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K-L Fashions, Inc.

Financial Statements Income Statement For the year ended January 31: (Dollars in thousands) Net Sales Cost of Goods Gross Profit Selling, General and Administrative Expenses (including depreciation) Income from Operations Other Income (expenses): Interest and other income Interest Expense Income Before Income Taxes Income Tax Provision Net Income 2005 $6,039,750 3,573,070 2,466,680 2,221,540

245,140 14,470 (10,180) 249,430 102,000 $147,430

This is the income statement where the Expenses made by the company is deducted from the Service Revenue or Income, therefore; Net Sales (6,039,750) Cost of Goods (3,573,070) = Gross Profit (2,466,680). Selling, General and Administrative Expenses are deducted from the Gross Profit (2,466,680-2,221,540= 245,140) then Interest and other income is added while interest expense is deducted (245,140 + 14,470 -10,180 = 249,430) Income tax provision is then deducted from the Income (249,430-102,000= 147,430) the final net income is $147,430. K-L Fashions, Inc. Financial Statements Balance Sheet January 31: (Dollars in thousands) Assets Current Assets: Cash and Cash Equivalents Receivables Inventory Prepaid Expenses Total Current Assets Property, Plant & Equipment (at cost): Land and Buildings Fixtures and equipment Leasehold improvements Construction in progress 2005

$272,640 12,090 738,630 54,880 1,078,240

531,270 476,460 16,460 ----

Less Accumulated Depreciation Property, Plant & Equipment, net Total Assets

(248,430) 775,760 $1,854,000

Liabilities and Stockholders Equity Current Liabilities: Accounts Payable Advance Payment on Orders Income Taxes Payable Other Current Obligations Total Current Liabilities Long-Term Debt Stockholders Equity: Common Stock; 20.1M, 20.1M &20.0M Shares, respectively, at par Additional Capital, net Retained Earnings Less Treasury Stock, at cost Total Stockholders Equity Total Liabilities and Equity

$377,970 4,460 70,800 154,510 607,740 78,000

2,010 311,360 983,810 (128,920) 1,168,260 $1,854,000

In this financial statement, the Changes in Owners Equity Statement and the Statement of Financial Position is combined into one financial statement. The grey highlighted part is the statement of changes in owners equity and here its seen that the additional capital and retained earnings is added to the common stock (2,010+311,360+983,810= 1,297,180). Treasury stock is deducted from the current owners equity (1,297,180-128,920 = 1,168,260) total owners equity is $ 1,168,260. The
statement of financial position starts with the assets. Current assets are computed by getting the sum of Cash and Cash Equivalents, Receivables, Inventory, and Prepaid Expenses (272,640+12,090+738,630+54,880= 1,078,240). For the non-current assets, Land and Buildings, Fixtures and equipment, and Leasehold improvements are added together then Accumulated Depreciation is deducted from the non-current assets. (531,270+476,460+16,460-248,430= 775,760). Adding the current and non-current assets would get the value of total assets (1,078,240+775,760= 1,854,000). Next we go to liabilities starting with current liabilities. Accounts Payable, Advance Payment on Orders, Income Taxes Payable, and Other Current Obligations are added up to get the amount of current liabilities (377,970+4,460+70,800+154,510= 607,740) Next the noncurrent liability is added along with the owners equity to get the total liabilities and owners equity (607,740+78,000+1,168,260 =1,854,000) so the total assets and total liabilities and owners equity are balanced (1,854,000 = 1,854,000).

K-L Fashions, Inc. Financial Statements Statement of Cash Flows (Major component totals only) For the year ended January 31: (Dollars in thousands) 2005 $ 512,020

Net cash flows from operating activities Net cash flows from investing activities Net cash flows from financing activities Net increase (decrease) In cash and cash equivalents

(175,410)

(146,510)

$ 190,100

For the statement of cash flows, the net increase (decrease) is taken by adding the cash flows from operating activities (earned by services rendered), investing activities ( income from investing), and financing activities (interest from stocks or loans). (512,020-175,410-146,510 = 190,100). In the final computation, there is a net increase of 190,100

Business case taken from: Virginia Small Business Development (Revised for the VSBDC by Henry Reeves 3/22/2011)

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