how do we find net income?

Question

Rousey Manufacturing Company was started on January 1, 2008, when it acquired $85,000 cash by issuing common stock. Rousey immediately purchased office furniture and manufacturing equipment costing $12,000 and $34,000, respectively. The office furniture had a 6-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of 5 years. The company paid $10,000 for salaries of administrative personnel and $15,000 for wages to production personnel. Finally, the company paid $18,000 for raw materials that were used to make inventory. All inventory was started and completed during the year. Rousey completed production on 6,000 units of product and sold 5,000 units at a price of $15 each in 2008. (Assume that all transactions are cash transactions.)
Cost of goods sold is $32500
Net income = ?
Retained earnings = ?
Total assets = ?
Net cash flow from operating activities = ?
Net cash flow from investing activities =

Answer 1

NI = 5000X15 - 32500 - 10,000 - 15,000 - 2000 - 6000 = $9,500

RE = 85,000 + 9,500 = 94,500

Total Assets = (12000-2000) + (34000-6000) + (1000X[18000/6000]) + cash of 71,000 = 189,000

I'm not sure on the cash number because I don't know if the 18k raw materials is part of COGS.

Cash flow from OP ACT = NI + DEPR = 9500+8000 = 17.5k

Cashflow from Investing = I dont know

Answer 2

Net Income = 75,000 Sales
-32,500 Cost of Goods Sold
- 2,000 Depreciation Expense
-10,000 Admin Salaries
31,000 Net Income

Retained Earnings = 85,000 Stock Issuance
+31,000 Net Income
116,000 Retained Earnings

Total Assets = 85,000 Cash Issuance
-12,000 Furniture Purchase
+10,000 Furniture Balance at Year End
-34,000 Manufacturing Equipment Purchase
+28,000 Equipment Ending Value
-10,000 Admin Salaries
-15,000 Production Salary
-18,000 Raw Materials
+ 6,500 Ending Inventory
+75,000 Sales (Cash)
115,500 Ending Assets

Cash flow from Operations = 75,000 Sales
-15,000 Production Wages
-18,000 Raw Materials
-34,000 Manufacturing Equip
8,000 Ending Cash Flow

Cash Flow from Investing = 85,000 Stock Issuance

Hope that helps!

Answer 3

I'll do this 1 component at a time, then I'll fit them all together.
Depreciation of mfg equipment ($6k) goes into cost of goods manufactured, and depn of office equipment ($2k)goes into admin expenses. Total cost of gds mfd = raw mat'ls + production wages + factory overhead, i.e 18k + 15k + 6k = 39k. It cost 39k to manufacture 6k units, of which 5k were sold, so COGS = 32.5k and ending inventory = 6.5k

Net book value of mfg equip. = 34k - 6k = 28k
Nbv of office equip. = 12k - 2k = 10k

Ending cash bal. = 85k + 75k - 12k - 34k - 10k - 15k - 18k = 71k

Ready? Here we go:
Net Income
Sales 75k
COGS (32.5k)
Admin. sal. (10k)
Admin. depn (2k)
NI = 30,500

This is the 1st yr, so Retained Earnings (RE) = NI = $30.5k

Stockholders' Equity:
Common stock 85k
RE 30.5k
SE = 115,500

Total assets:
Fixed assets (at nbv) 38k (see above 28k + 10k)
Inventories 6.5k
Cash 71k
Total assets = 115,500

Net cash flow from op'g activities:
NI 30,500
Adjustment for:
Depn 8,000
Increase in inventory (6,500)
Net cash flow from op'g activities = 32,000

Net cash used in investing activities:
Purchase of fixed assets (46,000)

Net cash from financing activities:
Proceeds from stock issue 85,000

Your cash flow statement would look like this:
Net cash flow from op'g activities 32,000
Net cash used in investing activities (46,000)
Net cash from financing activities 85,000
Net increase in cash & cash equivalents 71,000
CCE at beginning 0
CCE at end 71,000

Answer 4

internet earnings is gross sales minus expenses. It particularly does not get lots greater complicated than that. proprietor's investment or withdrawal does not enter into internet earnings, as they are actually not on the subject of sales. they're stability sheet transactions, no longer earnings assertion.