Chemalite Case Study
Essay by Rohit Mittal • August 28, 2019 • Case Study • 1,112 Words (5 Pages) • 2,910 Views
Assignment 2
This assignment has two parts. Part A relates to the Chemalite case. (Purchase instructions are in the syllabus.) Part B asks about the Statement of Cash Flows for Scholastic Corporation. Part C relates to Scholastic Corporation’s taxes.
- Chemalite Case
Required:
- Using the financial statement template, below, record the effect of each of Chemalite’s transactions for 2003. Please make the simplifying assumption that Chemalite’s machinery is used solely for non-manufacturing purposes. Please also assume that the depreciation on the machinery starts on July 1.
- Prepare Chemalite’s balance sheet as of December 31, 2003.
- Prepare Chemalite’s income statement for 2003.
Transaction | Cash | +A/R | +Inventory | +PP&E | +Intangibles | = | Loan | +Common stock | +Retained earnings |
Issue 500K shares | 375,000 | 125,000 | 500,000 | ||||||
Pay $7.5K for legal fees | (7,500) | (7,500) | |||||||
Pay $62.5K for machinery | (62,500) | 62,500 | |||||||
Purchase $75K in materials | (75,000) | 75,000 | |||||||
Pay $23.75K for prototypes | (23,750) | (23,750) | |||||||
Sell $754.5K of product; $69.5K not yet received | 685,000 | 69,500 | 754,500 | ||||||
Purchase $175K in materials | (175,000) | 175,000 | |||||||
Spend $22.5K in ads | (22,500) | (22,500) | |||||||
Incur $350K in manufacturing costs; Pay $80K for corporate expenses | (350,000) (80,000) | 350,000 | (80,000) | ||||||
Pay $150K for machinery | (150,000) | 150,000 | |||||||
Borrow $50K | 50,000 | 50,000 | |||||||
Depreciation expense | (10,625) | (10,625) | |||||||
Cost of goods sold | (545,000) | (545,000) | |||||||
Patent amortization | (25,000) | (25,000) | |||||||
Repay $50K loan + $750 interest | (50,750) | (50,000) | (750) | ||||||
Order received for Olympic Games | NA | NA | NA | NA | NA | NA | NA | NA | |
Ending balance 12/31/03 | 113,000 | 69,500 | 55,000 | 201,875 | 100,000 | 500,000 | 39,375 |
Chemalite’s balance sheet as of December 31, 2003
Assets | ||
Cash | 113,000 | |
Accounts Receivable | 69,500 | |
Inventory | 55,000 | |
Total Current Assets | 237,500 | |
Property, Plant & Equipment | 201,875 | |
Intangibles | 100,000 | |
Total Assets | 539,375 | |
Liabilities & Stockholders’ Equity | ||
Common Stock | 500,000 | |
Retained Earnings | 39,375 | |
Total Liabilities & Stockholders’ Equity | 539,375 |
Chemalite’s income statement for FY2003
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