GROSS PROFIT
OPERATING EXPENSES:
SELLING AND ADMIN
PATENT AMORTIZATION
OUTOFPACKET EXPENSES
INCORPORATION COSTS
TOTAL OPERTING EXPENSES
OPERATING PROFIT
LESS: INTERET
PROFIT BEFORE TAX
LESS: TAX
NET INCOME EAIT
DIVIDEND PAID
RETAINED EARNINGS
186000
63000
20000
25000
2500
110500
75500
500
75000
22500
52500
5000
47500
-212100
30000
-500
-145000
BALANCE SHEET
SOURCES OF FUNDS
EQUITY CAPITAL
RETAINED EARNINGS
200000
47500
SHAREHOLDER FUNDS
LOAN FUNDS
TOTAL LIABILITIES AND EQUITY
APPLICATION OF FUNDS
FIXED ASSETS
PAYTENTS(120000-20000)
EQUIPMENT (85000-8500)
CURRENT ASSETS
INVENTORY
CASH
CURRENT LIBILITIES
TAXES PAYABLE
SHORT TERM LOAN
NET CURRENT ASSETS (CA-CL)
TOTAL ASSETS
100000
76500
15100
78400
22500
0
CASH FLOW STATEMENT
PROFIT BEFORE TAX
ADD: NON CASH EXP AND NON OP.EXP
AMORTIZATION
DEPRECIATION
INTEREST
LESS:NONCASH AND NON OP.INC
OPERATING PROFIT BEF.WC CHANGES
ADD:INCREASE IN CL AND DECREASE IN CA
LESS:DECREASE IN CL AND INCREASE IN CA
INVENTORY
NET CASH GENE. FROM OP. ACT.
CASH FLOWS FROM INVESTING ACT.
EQUIPMENT PURCHASE
NET CASH USED IN INVEST. ACT
CASH FLOWS FROM FINANCING ACT.
PROCEEDS FROM CAPITAL
INTEREST PAID
DIVIDEND PAID
COST OF GOODS SOLD
Opening Inventory
ADD: Purchases
ADD: Direct Expenses
Payroll
Manufacturing cost
Depreciation
LESS:Closing Inventory
Cost of goods sold
0
0
212100
212100
145000
62000
8500
427600
15100
412500
q1
How might Hynes and the investors use the profit plan in managing business?
Profit plans are used for a variety of purposes. These incluce:
to force short range planning
as a basis for evaluating performance and determining compensation
to encourage corodination and communication between different organisation units and lev
as a challenge to improve performance
as a means for training managers
as an early warning system
as a guide to spending
q2
How might the projected transactions impact the company's balance sheet?
please check transaction analysis sheet
q3
Prepare the profit plan in the form of income statement for the first year of operations
please check the prepared income statement
q4
Prepare the balance sheet as of the end of the first year of operations
please check the prepared balance sheet
q5
Hynes made a number of accounting decisions. Do you agree with these decisions?
there are three accounting decisions that require Hynes to exercise judgment. They are
PATENT VALUATION
PATENT AMORTIZATION PERIOD
EQUIPMENT DEPRECIATION PERIOD
hopefully, the patent amortization and depreciation periods represent Hyne's best estimate
g business?
organisation units and levels
ce sheet?
t year of operations
these decisions?
e judgment. They are
ent Hyne's best estimate of the related assets' useful life.