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Sales Merchandise costs Operating, general, and administrative Rent Depreciation and amortization Loss on inventory writedown Interest

Expense Earnings before taxes Tax expense Net Earnings Assets Cash and Temporary Investments Receivables Inventories Prepaid and other current assets Land Buildings and Equipment (net) Total Assets

Dec. 31, 2009 (1) & (2) (3a) 10,000 6,000 500 300 200 1,000 2,000 800 1,200










7,000 3,000 7,000 5,000 10,000 8,000 40,000

Liabilities & Equity Accounts payable Accrued income taxes Other current liabilities Dividends payable Long-term Debt Common Stock Treasury Shares Retained Earnings Fair value revaluation Total Liabilities and Shareowner's equity

1,000 1,000 8,000 20,000 4,000 6,000 40,000

Cash Flow Statement (in no particular order) Cash Flow from Operations: Net income Depreciation Loss on inventory writedown change in Receivable change in Inventories change in prepaids change in accounts payable change in accrued income taxes change in other current liabilities Other non cash expense Interest paid Cash Flow from Financing Activities: New Debt Stock Buyback Payment of principal Cash Flow from Investing Activities: purchase of equipment Total change in Cash







In the following sheet (entitled "Solutions", you will see the financial statements of company XYZ, for the year ending Dec. 31, 2009. Please construct, for the year endin Balance Sheet, Income Statement, and Cash Flow Statement, given the information below (fiscal year runs from Jan. 1 to Dec. 31)

1) 2) 3)

Sales increase by 10%, this also affected operation expenses (except depreciation and financing) in the same rate. It affects current assets (except cash) and current liabilities on the balance sheet, also by a 10% increase (a) On Jan 1, 2010, The company borrows new debt in the amount of 30.000 for a period of 30 years. (b)The rate carries an interest rate of 10%, to be paid on Dec. 31 of each year. 4) The company initiates a stock buyback, where 2.000 of the outstanding common stock is purchased back (this is classified as treasury shares and is a deduction from equity) 5) (a) In an expansion strategy, on March 1, 2010, the company purchases new equipment in the value of 10.000, with a useful life of 10 years, no salvage value. (b) This is depreciated using the straight line basis. 6) The company announces dividends in the amount of 1.000. Those dividends are not paid as of fiscal year end 7) During an independent appraisal at fiscal year end 2010, Inventories on the books are written down by 10%. 8) Previously owned buildings and equipment are re-valued on Dec. 31, 2010, with an increase of 20% over previous book values 9) Depreciation on already owned buildings continues at the rate of 150 per year 10) Long-term debt previously owned has an interest rate of 5%, which has to be paid at the end of each year. The company also pays 1.000 of principal on Dec. 31 of each year

nstruct, for the year ending Dec. 31, 2010:

deduction from equity)

Dec. 31 of each year