ENMG602 Week6 HW2

Name: Issam Tamer
ID number: 202472487
ENMG602 – Introduction to Financial Engineering
Week 6 – Homework 2
a.
Account receivable………………………………………………………………3,000$
Sales………………………………………………………………………….…….3,000$
b.
Cash………………………………………………………………………………3,100$
Account receivable……………………………………………………………………3,100$
c.
No journal entry needed.
d.
Building and machinery…………………………………………………………………50$

Cash…………………………………………………………………………….50$
e.
Cash………………………………………………………………………………1.5$
Accumulated depreciation……………………………………………....8$
Loss on sale of machinery……………………………………………..0.5$
Building and machinery……………………………………………………………….10$
f.
Depreciation expense.................................................................................14$
Accumulated depreciation………………………………………………………………….14$
g.
Interest expense (senior debt) ……………………………………………………………6$
Interest payable (senior debt) ………………………………………………………………6$
h.
Interest expense (subordinated debt) ………………………………………………2.4$
Interest payable (subordinated debt) …………………………………………..2.4$
i.
Dividend……………………………………………………………14$
Cash……………………………………………………………………….14$
j. No journal entry needed.
k.
Wages expense……………………………………………57$
Wages payable ………………………………………………57$
Wages payable…………………………………………53$
Cash……………………………………………………………….53$
l.
Miscellaneous expense…………………………………50$
Cash………………………………………………………………50$
m.
Interest payable………………………………….7$
Cash………………………………………………………7$
n.
Inventory………………….……………………………………….2,820$
Account payable……………………………………………….2,820$
Cost of goods sold………………….……………………………………….2,800$

Inventory…………………………………………………………….2,800$
o.
Account payable………………………………………………2,700$
Cash…………………………………………………………………2,700$
p. No journal entry needed.
q.
Prepaid rent………………………………………………25$
Cash………………………………………………………….25$
Rent expense……………………………………………………...27$
Prepaid rent………………………………………………………27$
r.
Other accrued liabilities………………………………………5$
Cash......................................................................5$
s.
Miscellaneous expense……………………………………9$
Other accrued liabilities………………………………...9$
t.
Tax expense…………………………………………………12$
Tax payable……………………………………………………...12$
u.
Tax payable…………………………………11$
Cash………………………………………………….11$
Cash
Debit (Dr) Credit (Cr)
68$ 50$
3,100$ 14$
1.5$ 53$
50$
7$
2,700$
25$
5$
11$
254.5$
Account receivable
340$ 3,100$
3,000$
240$
Inventory
75$ 2800$
2820$
95$
Prepaid rent
32$ 27$
25$
30$
Building and machinery

100$ 10$
50$
140$
Land
25$
25$
Accumulated depreciation
8$ 25$
14$
31$
Account payable
2,700$ 2,820$
63$
183$
Wages payable
53$ 13$
57$
17$
Tax payable
11$ 6$
12$
7$
Interest payable
7$ 3$
6$
2.4$
4.4$
Other accrued liabilities

5$ 5$
9$
9$
Senior debt
100$
100$
Subordinated debt
30$
30$
Common stock
15$
15$
Additional paid in capital

115$
115$
Wages expenses
57$
57 $
Cost of goods sold

2,800$
2,800$
Miscellaneous expenses
50$
9$
59$
Depreciation expense
14$
14$
Interest expense
6$
2.4$
8.4$
Rent expense
27$
27$
Tax expense
12$
12$
Sales
3,000$
3,000$
Loss on sale of machinery
0.5$
0.5$
Dividend
14$
14$
Net income
2,800$ 3,000$
57$
59$
14$
8.4$
27$
12$
0.5$
22.1$
Retained earnings
14$ 265$
22.1$
273.1$
2.
Review Co.
Balance Sheet as of December 31, 2005

Assets Liabilities
Current assets Current liabilities
Cash 254.5$ Account payable 183$
Account receivable 240$ Wages payable 17$
Inventory 95$ Interest payable 4.4$
Prepaid rent 30$ Taxes payable 7$
Total current assets 619.5$ Other accrued liabilities 9$
Non-current assets Total current liabilities 220.4$
Building and machinery 140$ Non-current liabilities
Accumulated depreciation (31$) Senior debt 100$
Net, building and machinery 109$ Subordinated debt 30$
Land 25$ Total non-current liabilities 130$

Equites
Total non- current assets 134$ Common stocks 15$
Additional paid in capital 115$
Retained earnings 273.1$
Total equities 403.1$

Total assets 753.5$ Total liabilities and equities 753.5$
3.
Review Co.
Income statement as of December 31, 2005

Revenues
Sales revenue 3,000$
Cost of goods sold (2,800$)
Gross profit 200$

Expenses
Wages expense 57$
Miscellaneous expense 59$
Depreciation expense 14$
Interest expense 8.4$
Rent expense 27$
Tax expense 12$
Loss on sale of machinery expense 0.5$
Total expense 177.9$

Net income 22.1$
4.
Review Co.
Cash flow statement as of December 31, 2005

Operating activities
Net income 22.1$
(+) Expenses not requiring cash
Depreciation 14$
Loss on sale of machinery 0.5$

(+) Changes in current liabilities
Account payable 120$
Wages payable 4$
Interest payable 1.4$
Taxes payable 1$
Other accrued liabilities 4$
(-) Changes in current assets
Account receivable (100$)
Inventory 20$
Prepaid rent (2$)
Cash flow from operations 249$

Investing activities
(-) change in non-current assets
Sale of machinery (1.5$)
Purchase of machinery 50$
Cash flow from investing activities (48.5$)

Financing activities
(+) change in equity and non-current liabilities
Payment of dividend (14$)
Cash flow from investing activities (14$)

Change in cash (increase) 186.5$
Cash at the beginning of the period 68$
Cash at the end of the period 254.5$

ENMG602 Week6 HW2

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Name: Issam Tamer

Building and machinery…………………………………………………………………50$

Cost of goods sold………………….……………………………………….2,800$

p. No journal entry needed.

Building and machinery

Other accrued liabilities

Additional paid in capital

Cost of goods sold

Balance Sheet as of December 31, 2005

Cash 254.5$ Account payable 183$

Account receivable 240$ Wages payable 17$

Inventory 95$ Interest payable 4.4$

Prepaid rent 30$ Taxes payable 7$

Total current assets 619.5$ Other accrued liabilities 9$

Non-current assets Total current liabilities 220.4$

Building and machinery 140$ Non-current liabilities

Accumulated depreciation (31$) Senior debt 100$

Net, building and machinery 109$ Subordinated debt 30$

Land 25$ Total non-current liabilities 130$

Additional paid in capital 115$

Retained earnings 273.1$

Total equities 403.1$

Income statement as of December 31, 2005

Cost of goods sold (2,800$)

Gross profit 200$

Miscellaneous expense 59$

Depreciation expense 14$

Interest expense 8.4$

Rent expense 27$

Tax expense 12$

Loss on sale of machinery expense 0.5$

Total expense 177.9$

Cash flow statement as of December 31, 2005

(+) Expenses not requiring cash

Loss on sale of machinery 0.5$

Account payable 120$

Interest payable 1.4$

Other accrued liabilities 4$

(-) Changes in current assets

Account receivable (100$)

Prepaid rent (2$)

Cash flow from operations 249$

Sale of machinery (1.5$)

Purchase of machinery 50$

Cash flow from investing activities (48.5$)

Payment of dividend (14$)

Cash flow from investing activities (14$)

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