Scribd Logo
Upload

Welcome to Scribd!

  • 343 views

    Chemalite - A - en - B

    Uploaded by

    Aimane Beggar
    The document provides financial statements for Chemalite for the first and second half of 2003. For the first half: - Revenues were $0 and expenses were $145,000, resulting in a net loss of $145,000. - Cash decreased from $375,000 to $230,000. For the second half: - Revenues were $754,500 and net income was $39,375. - Cash decreased from $230,000 to $113,000. The business incurred pre-production expenses in the first half and became profitable after starting production in the second half. However, cash balances decreased over the full year period.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd

    Chemalite - A - en - B

    Uploaded by

    Aimane Beggar
    343 views12 pages
    The document provides financial statements for Chemalite for the first and second half of 2003. For the first half: - Revenues were $0 and expenses were $145,000, resulting in a net loss of $145,000. - Cash decreased from $375,000 to $230,000. For the second half: - Revenues were $754,500 and net income was $39,375. - Cash decreased from $230,000 to $113,000. The business incurred pre-production expenses in the first half and became profitable after starting production in the second half. However, cash balances decreased over the full year period.

    Original Description:

    Chemlite A & B case solution

    Original Title

    Chemalite _A_ en _B_

    Copyright

    © © All Rights Reserved

    Available Formats

    PPTX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document provides financial statements for Chemalite for the first and second half of 2003. For the first half: - Revenues were $0 and expenses were $145,000, resulting in a net loss of $145,000. - Cash decreased from $375,000 to $230,000. For the second half: - Revenues were $754,500 and net income was $39,375. - Cash decreased from $230,000 to $113,000. The business incurred pre-production expenses in the first half and became profitable after starting production in the second half. However, cash balances decreased over the full year period.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    343 views12 pages

    Chemalite - A - en - B

    Uploaded by

    Aimane Beggar
    The document provides financial statements for Chemalite for the first and second half of 2003. For the first half: - Revenues were $0 and expenses were $145,000, resulting in a net loss of $145,000. - Cash decreased from $375,000 to $230,000. For the second half: - Revenues were $754,500 and net income was $39,375. - Cash decreased from $230,000 to $113,000. The business incurred pre-production expenses in the first half and became profitable after starting production in the second half. However, cash balances decreased over the full year period.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12
    At a glance
    Powered by AI
    The case discusses the financial statements of Chemalite for the periods January 2003 to June 2003 and July 2003 to December 2003.

    The financial statements prepared for the first half of 2003 were the opening balance, income statement, and ending balance.

    The expenses incurred in the first half of 2003 were $7,500 for legal fees, $62,500 for building the machine, and $75,000 for inventory.

    Chemalite (A)

    Chemalite (B)
    Templates cases
    Chemalite Case (A)

    QUESTIONS:
    1. Prepare the post-production Financial Statements
    (Period Jan 2 – June 30, 2003)
    - Opening Balance
    - Income Statement
    - Ending Balance

    2. Prepare the second half year production Financial Statements


    (Period July 1 – December 31, 2003)
    - Income Statement
    - Ending Balance

    3. Comments on the business based on above figures


    Chemalite
    Opening Balance 2 Jan. 2003

    Assets Liabilities & Owner’s Equity

    Cash 375,000

    Patent 125,000 Common Stock 500,000


    500,000 500,000

    Note: Follow the Cash


    Chemalite
    Income Statement 1H2003

    Revenues $0

    Expenses $145,000

    Net Income -$145,000


    In this (pre-production) period $145,000 is paid for:
    - $7,500 legal fees,
    - $62,500 building the machine
    - $75,000 inventory
    These should be treated as expenses (not cash out)

    Note: Accrual Principle: Matching Revenues with Costs


    Chemalite
    Ending Balance June 30, 2003

    Assets Liabilities & Owner’s Equity

    Cash 230,000
    Capitalized Legal 7,500
    Inventory 75,000
    Fixed Assets 62,500 Common Stock 500,000
    Patent 125,000 Retained Earnings 0
    500,000 500,000

    Note: Cash = 375,000 – 145,000 = 230,000


    Chemalite
    Statement of Cash Flows 1H2003
    Cash Flows from:
    Operations:
    - Purchase inventory 75,000
    Investing:
    - Purchase machinery 62,500
    - Legal Costs 7,500

    Financing:
    - Sale Common Stock 375,000
    Increase (Decrease) in Cash -145,000
    Cash Begin 375,000
    Cash Ending 230,000
    Chemalite
    Income Statement 2H2003
    Revenues 754,500
    Expenses:
    - Legal Expenses 7,500
    - Advertising 22,500
    - Administration 80,000
    -Manuf. Costs 350,000
    -Raw Materials * 195,000
    - R&D 23,750
    - Interest 750
    -Depreciation FA ** 10,625
    - Amortization P *** 25,000
    Net Income 39,375
    * Beginning (75,000) + Purchases (175,000) – Ending (55,000) = 195,000
    ** (62,500+150,000)/10 yrs x 0,5 yr = 10,625*** 125,000/Econ. life = 5 yrs = 25,000
    Chemalite
    Ending Balance Dec. 31, 2003

    Assets Liabilities & Owner’s Equity

    Cash 113,000
    Receivables 69,500
    Inventory 55,000
    Fixed Assets (net) 201,875 Common Stock 500,000
    Patent 100,000 Retained Earnings 46,875
    539,375 539,375

    Note: Fixed Assets = (62,500+150,000) – 10,625= 201,875


    Chemalite
    Statement of Cash Flows 2H2003
    Cash Flows from: Indirect Method
    Operations: - to Retained
    Net Income 39,575 Earnings
    - Depr. & Amort 35,625
    - Increase in Receivables 69,500
    - Decrease in Inventory 195,000
    Investing 150,000
    Financing 750
    Increase (Decrease) in Cash 117,000
    Cash Begin 230,000
    Cash Ending 113,000
    Note: for Balance Sheet 31 Dec. 1991 See Chemalite(B) case Exh. 1
    Chemalite (B) Statement of Cash Flow – Indirect Method
    Begin and End columns to calculate only for Balance sheet accounts,
    not Inocme Stattements accounts (like Net Income, Depreciation)
    Chemalite (B)
    Gain on Sales of Fixed Assets (Machines)

    Included in Cash Flow In from Investing


    Cash **
    Machines (historical value) *
    Accum. Depreciation (jun – jul)
    Book value
    Gain on Sale of Machines
    (Incl. in Income Statement Net Income,
    but it is Not a Cash Flow item, so take out)

    * .............. + 1............. = ............. ** = ‘market value’


    Chemalite (B)

    Buy PPE (land 250 and building 600) for $850,000


    50% paid = $425,000
    Plus new machine = $520,000
    Total Investing = $1,370,000

    PPE Property Plant and Equipement) = $212,500


    - New machine $520,000
    - PPE $850,000

    Begin $212,500 (sold old machine with a gain of $215,500)


    End ($1,370,000 + $215,500)

    You might also like