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Balance Sheet Questions
What is a balance sheet?
The financial statement of a company that lists its assets and liabilities is called a balance sheet. The shareholder’s equity at any given point in time is also listed on it. Balance sheets often cause some confusion, read below where Experts have answered these questions.
Is the net income that is reported on the balance sheet the same as the net income that is reported on an income statement of a company?
The net income that is reported on the balance sheet of a company should be the same as the net income reported on the income statement as it is normally derived from the income statement itself.
What can one do if the net income on the balance sheet is different from that of the income statement?
If the net income on the balance sheet is different from that of the income statement, the individual may have to check if the trial balance levels and ending balances are all correct. He/she may also have to check if the ending ledger balances are correctly reported on the profit and loss accounts and make sure that no entries are omitted.
Where should one report service revenue on the balance sheet?
The service revenue is not reported on the balance sheet. It is normally reported on the income statement under the revenues section. However, if the revenue is received before the service is performed, then it may be reported on the balance sheet as a current liability. In such a situation, the revenue may have to be earned within a year of reporting it. Such revenue may be called deferred service revenue.
Is it required for all the liabilities and assets to match on a balance sheet?
It is required for all the assets of a firm to match all its liabilities on a balance sheet. If there are any profits in the firm, then they will be reported under the retained earnings section of the sheet.
Can a balance sheet be used to calculate the rate of return on an investment?
A balance sheet may not be very helpful if an individual wants to calculate the
rate of return
on an investment. This is because the balance sheet will only list the company’s assets and liabilities. If an individual wants to calculate the rate of return, he/she may use the income statement.
What is the difference between an unclassified and classified balance sheet?
All of an individual’s assets, liabilities and equity are grouped together on an unclassified balance sheet. All the assets will be grouped under the asset grouping, the liabilities under the liabilities grouping and the equity accounts under the equity grouping. A classified balance sheet is where the assets and liabilities will be further broken into current and noncurrent groups. The equity will be divided into capital, additional paid in capital and retained earnings.
Can an individual report accounts like accounts payable and payroll liabilities to balance out everything that is mentioned on a monthly balance sheet?
An individual may report accounts like accounts payable and payroll liabilities to balance out everything that is mentioned on a monthly balance sheet.
What is the difference between a balance sheet and a profit and loss statement?
A balance sheet reports the company’s assets, liabilities and equity at any given point of time whereas the profit and loss statement will report the profit made by the company. This will include any revenue and expenses of the company over a period of time.
A balance sheet is very important to report a company’s financial assets and liabilities. It is also crucial for tax purposes. Hence you should be able to understand how a balance sheet is created and what needs to be reported in it. You can ask an Expert if you have any doubts about the creation of a balance sheet or any of its other aspects.
Recent Balance Sheet Questions
Taxpayer is an S Corp. 2014 is the final year of the
Taxpayer is an S Corp. 2014 is the final year of the corporation. Shareholder A loaned $200,000 to S Corp in prior years. $120,000 of the loan has been used for shareholder losses in prior years. The beginning debt basis is $80,000 as of 1/1/14. The S
corp is insolvent and the ending balance sheet contains only the $200,000 of loans payable to Shareholder A at 12/31/14. 1 - Is the $200,000 cancelled debt excluded from the shareholder's income due to insolvency of the S Corp? 2 - If so, does the tax exempt
income increase the shareholder's basis in the debt and subsequently allow the shareholder a loss on the bad debt to the extent of the restored basis of $200,000?
I have a multiple problem request. The assignments need to
I have a multiple problem request. The assignments need to be done by 10 pm on 7/12. roblem 9-3 Cost of Preferred Stock Duggins Veterinary Supplies can issue perpetual preferred stock at a price of $54.50 per share with an annual dividend of $5.50 a share.
Ignoring flotation costs, what is the company's cost of preferred stock, rps? Round your answer to two decimal places. % Problem 9-4 Cost of Preferred Stock with Flotation Costs Burnwood Tech plans to issue some $60 par preferred stock with a 7% dividend.
A similar stock is selling on the market for $73. Burnwood must pay flotation costs of 5% of the issue price. What is the cost of the preferred stock? Round your answer to two decimal places. % Problem 9-5 Cost of Equity: DCF Summerdahl Resorts' common stock
is currently trading at $33.00 per share. The stock is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00), and the dividend is expected to grow at a constant rate of 4% a year. What is the cost of common equity? Round your answer
to two decimal places. % Problem 9-7 WACC Shi Importers' balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 30%, rd = 7%, rps = 6.3%, and rs = 10%. If Shi has a target capital
structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places. % Problem 9-9 Bond Yield and After-Tax Cost of Debt A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures
in 20 years sells at a price of $640.49. The company's federal-plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculating the WACC? (Hint: Base your answer on the nominal rate.) Round your answer to two decimal
places. % Problem 9-12 Calculation of g and EPS Spencer Supplies's stock is currently selling for $60 per share. The firm is expected to earn $6.00 per share this year and to pay a year-end dividend of $3.00. If investors require a 10% return, what rate of
growth must be expected for Spencer? Round your answer to two decimal places. % If Spencer reinvests earnings in projects with average returns equal to the stock's expected rate of return, then what will be next year's EPS? (Hint: g = ROE × Retention ratio.)
Round your answer to the nearest cent. $ Problem 9-13 The Cost of Equity and Flotation Costs Messman Manufacturing will issue common stock to the public for $35. The expected dividend and growth in dividends are $3.25 per share and 3%, respectively. If the
flotation cost is 13% of the issue's gross proceeds, what is the cost of external equity, re? Round your answer to two decimal places. % Problem 9-16 Market Value Capital Structure Suppose the Schoof Company has this book value balance sheet: Current assets
$30,000,000 Current liabilities $10,000,000 Fixed assets 50,000,000 Long-term debt 30,000,000 Common stock (1 million shares) 1,000,000 Retained earnings 39,000,000 Total assets $80,000,000 Total claims $80,000,000 The current liabilities consist entirely
of notes payable to banks, and the interest rate on this debt is 10%, the same as the rate on new bank loans. These bank loans are not used for seasonal financing but instead are part of the company's permanent capital structure. The long-term debt consists
of 30,000 bonds, each with a par value of $1,000, an annual coupon interest rate of 6%, and a 25-year maturity. The going rate of interest on new long-term debt, rd, is 12%, and this is the present yield to maturity on the bonds. The common stock sells at
a price of $70 per share. Calculate the firm's market value capital structure. Round your answers to two decimal places. Short-term debt $ % Long-term debt $ % Common equity $ % Total capital $ %
You are the portfolio manager at your company overseeing a
You are the portfolio manager at your company overseeing a $2 million investment in corporate bonds. The portfolio is well diversified and includes short and long term bonds as well as high and low coupon rates. Your most recent interest rate forecast, points towards a decline in interest rates for the foreseeable future.
What are the implications of the expected interest rate change on bond portfolio value?
b. What is your plan of action, if any, as a result? Please be specific.
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