1 FI 3300 - CORPORATION FINANCE Take-Home Problem Set One (THPS-1) Spring 2021 Directions: This problem set covers chapter 2 (Accounting Review) in the textbook and basic math skills that you will use throughout this course. Determine or compute an answer for each question/problem. After you have computed an answer for every question, enter your answers online via the “quiz” function entitled “THPS 1 ANSWER SUBMISSION FORM.” See course calendar for due date and for chat session dates during which I will answer questions about the THPS and/or provide hints for how to solve certain problems. This is a take-home, open book, open notes financial statement analysis problem set. Work on this Assignment is to be yours alone - any discussion of either the questions on the assignment or your answers with anyone other than your instructor will be considered as cheating and, thus, as a violation of the GSU honor code. _____________________________________________________________ Financial statement data for Retaillia, Inc. (a fitness product retail company) are given below. All figures are in dollars. Use this data to construct an Income Statement for the year ending December 31, 2020 and use your constructed statement to answer the following 4 questions. 1. What was gross profit from Retaillia’s income statement for the year ending December 31, 2020? 2. What was operating profit (i.e., EBIT) from Retaillia’s income statement for the year ending December 31, 2020? 3. What was profit before taxes (i.e., EBT) from Retaillia’s income statement for the year ending December 31, 2020? 4. What was net income from Retaillia’s income statement for the year ending December 31, 2020? 5. Given the following information for Bloominati, Inc., calculate per share dividend dollar amount (that is, the dividends per share), rounded to the nearest cent (i.e., $5.21843 = $5.22) that the company paid out in 2020: • Retained earnings reported on December 31, 2019 balance sheet: $4,218,600 • Retained earnings reported on December 31, 2020 balance sheet: $4,326,800 • Net Income reported on December 31, 2019 income statement: $658,700 • Net Income reported on December 31, 2020 income statement: $547,900 • Number of shares of common stock outstanding at the end of 2019: 206,600 shares • Number of shares of common stock outstanding at the end of 2020: 240,000 shares Advertising 8,640 Beginning of year inventory 104,960 Depreciation 16,840 End of year inventory 101,680 General and administrative expenses 49,650 Gross sales 1,495,620 Interest expense 21,870 Lease payments 18,670 Management salaries 287,620 Purchases 946,310 Research and development 14,960 Returns and allowances 18,760 Taxes 34,8702 6. The Canavana Company gathered the following condensed data for the year ended December 31, 2020: The Canavana Company's assets at the beginning of 2020 were $900,000, and the assets were $950,000 at the end of 2020. What did the Canavana Company report as net income on its 2020 income statement? 7. In 2020, the GlowScapes, Inc. purchased 2,589,600 units from its supplier at a cost of $26.00 per unit. GlowScapes sold 2,786,450 units of its product in 2020 at a price of $36.00 per unit. GlowScapes began 2020 with 354,900 units in inventory (inventory is carried at a cost of $26.00 per unit). Using this information, compute GlowScapes’ gross profit for 2020. 8. Referring back to the previous question, compute GlowScapes’ 2020 ending inventory balance in dollars (valued at cost per unit of $26.00). 9. In 2020, Retailzilla, Inc. (a retail clothing company) sold 58,000 units of its product at an average price of $160.00 per unit. The company reported estimated returns and allowances in 2020 of 1.0 percent of gross revenue. Retailzilla actually purchased 62,000 units of its product from its manufacturer in 2020 at an average cost of $120.00 per unit. Retailzilla began 2020 with 23,000 units of its product in inventory (carried at an average cost of $120.00 per unit). Operating expenses (excluding depreciation) for Retailzilla, Inc. in 2020 were $1,526,000 and depreciation expense was $95,000. Retailzilla had $4,000,000 in debt outstanding throughout all of 2020. This debt carried an average interest rate of 4.5 percent. Finally, Retailzilla’s tax rate was 20 percent. Retailzilla's fiscal year runs from January 1 through December 31. Given this information, compute net income for Retailzilla, Inc. for 2020. 10. Referring back to the previous problem, compute Retailzilla’s ending inventory balance for 2020 (that is, what did Retailzilla report as inventory on its December 31, 2020 balance sheet). Account Amount (or percentage)Cost of Goods Sold $500,000 Net Sales 957,000Selling Expenses 150,000Interest Expense 25,000Administrative Expenses 175,000Common Stock Dividends Paid 50,000Income tax percentage 36%3 Financial data for Retail Apex, Inc. is given below. All figures are in dollars. Use this data to construct a Balance Sheet for the company for the year ending December 31, 2020 and use your constructed statement to answer the following 5 questions (i.e., 11 through 15). NOTE: Not every item in the list below belongs on the balance sheet – you have to use some given data to determine needed accounts for the balance sheet. However, other than what is listed and/or can be derived, there are no other accounts on Jade’s balance sheet - use cash as a plug figure to balance the balance sheet. 11. What did Retail Apex record as Total Current Assets on December 31, 2020 balance sheet? 12. What did Retail Apex record as Total Current Liabilities on December 31, 2020 balance sheet? 13. What did Retail Apex record as Total Assets on December 31, 2020 balance sheet? 14. What was Total Shareholder’s Equity on Retail Apex December 31, 2020 balance sheet? 15. Retail Apex, Inc. reported net income for 2020 of $2,286,200 and the company paid dividends of $1.05 per share in 2020. Given this information (along with the data provided above), compute what Retail Apex Company reported as retained earnings on its December 31, 2019 balance sheet? (Assume that no additional shares of stock were issued between December 31, 2019 and December 31, 2020). 16. The year-end 2019 balance sheet for Thitch, Inc. lists common stock ($1.20 par value) at $7,620,000 capital surplus at $86,543,000 and retained earnings at $218,546,000. On the 2018