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Verdich [7]
2 years ago
7

At the beginning of the year (January 1), Buffalo Drilling has $11,000 of common stock outstanding and retained earnings of $6,9

00. During the year, Buffalo reports net income of $7,200 and pays dividends of $1,900. In addition, Buffalo issues additional common stock for $6,700. Required: Prepare the statement of stockholders' equity at the end of the year (December 31)..
Business
1 answer:
slamgirl [31]2 years ago
4 0

Answer:

<u>Statement of stockholders' equity at the end of the year December 31</u>

                                               Common Stock  Retained Earnings   Total

At Beginning of the year :

Balances                                      $11,000                 $6,900       $17,900

During the Year :

Net Income                                      -                         $7,200        $7,200

Dividend                                          -                         ($1,900)       ($1,900)

Issue of Common Stock             $6,700                       -              $6,700

At End of the Year :

Balances                                    $17,700               $12,200       $29,900

Explanation:

Stockholders' equity represents all items that are attributable to the owners of the company.

The statement of stockholders' equity at the end of the year December 31 has been prepared above according to IAS 1.

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3 years ago
1. What is the revised net operating income if unit sales increase by 16%? 2. What is the revised net operating income if the se
weeeeeb [17]

Answer:

1) NOI = $90,240

2) NOI = 29,250

3) NOI = 133,260

4) NOI = 110,190

Explanation:

<em>The question is incomplete.</em>

<em />

<em>Sales (38,000 units)      $342,000     ($9.00 per unit)</em>

<em>Variable expenses        $228,000     ($6.00 per unit)</em>

<em>Contribution margin        $114,000     ($3.00 per unit)</em>

<em>Fixed expenses                $42,000 </em>

<em>Net operating income      $72,000</em>

1. What is the revised net operating income if unit sales increase by 16%

If unit sales increase, we can calculate this with a 16% increase in the contribution margin.

NOI=CM*(1+0.16)-FE=114,000*1.16-42,000=132,240-42,000\\\\NOI=90,240

2. What is the revised net operating income if the selling price decreases by $1.50 per unit and the number of units sold increases by 25%?

A reduction of $1.50 in price means a reduction of the same amount in the contribution margin per unit (CMu), as the variable expenses stay the same .

Also, the contribution margin increases by 25%, for the increase in units sold (q).

NOI=CM_u*q-FE=(3.00-1.50)*(38,000*1.25)-42,000\\\\NOI=1.5*47,500-42,000=71,250-42,000\\\\NOI=29,250

3. What is the revised net operating income if the selling price increases by $1.50 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 6%?

The selliing price will be added to the contribution margin per unit.

The units sold are increased 6%.

NOI=CMu*q-FE=(3.00+1.50)*38,000*1.06-(42,000+6,000)\\\\NOI=4.5*40,280-48,000=181,260-48,000\\\\NOI=133,260

4. What is the revised net operating income if the selling price per unit increases by 20%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 11%?

The contribution margin per unit, with a increase in price and an increase in variable cost, becomes:

CM_u=P-VE_u=9.00*(1.20)-(6.00+0.30)=10.80-6.30=4.50

The units sold is now:

q'=(1-0.11)q=0.89q=0.89*38,000=33,820

Then, the net operating income becomes:

NOI=CM_u*q-FE=4.5*33,820-42,000=152,190-42,000\\\\NOI=110,190

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