Professional Documents
Culture Documents
Cash
Patent
Incorporation costs
Equipment
Outofpocket costs
Purchases
Shortterm loan
Interest
Payroll
120000
80000
120000
2500
85000
25000
212100
30000
500
145000
Other Manu.costs
Selling and Admn Costs
Sales
Depreciation
Acc. Depreciation
Patent Amortization
Acc. Amortization on patent
Dividends
Incometax expenses
Incometax Payable
62000
63000
598500
8500
8500
20000
20000
5000
22500
22500
80000
-2500
-85000
-25000
-30000
INCOME STATEMENT
SALES
LESS: COST OF GOODS SO
598500
412500
GROSS PROFIT
OPERATING EXPENSES:
SELLING AND ADMIN
PATENT AMORTIZATION
OUTOFPACKET EXPENSES
INCORPORATION COSTS
TOTAL OPERTING EXPENSES
OPERATING PROFIT
LESS: INTERET
PROFIT BEFORE TAX
LESS: TAX
NET INCOME EAIT
DIVIDEND PAID
RETAINED EARNINGS
186000
63000
20000
25000
2500
110500
75500
500
75000
22500
52500
5000
47500
-212100
30000
-500
-145000
BALANCE SHEET
SOURCES OF FUNDS
EQUITY CAPITAL
RETAINED EARNINGS
200000
47500
SHAREHOLDER FUNDS
LOAN FUNDS
TOTAL ASSETS
100000
76500
15100
78400
22500
0
20000
8500
500
200000
-62000
-63000
598500
-5000
-30000
78400
120000
2500
85000
25000
212100
0
500
145000
62000
63000
598500
8500
8500
20000
20000
5000
22500
22500
849500 849500
247500
0
247500
176500
93500
22500
71000
247500
75000
29000
0
104000
0
-15100
88900
-85000
-85000
80000
-500
-5000
74500
78400
0
212100
212100
145000
62000
8500
427600
15100
412500
q1
How might Hynes and the investors use the profit plan in managing business?
Profit plans are used for a variety of purposes. These incluce:
to force short range planning
as a basis for evaluating performance and determining compensation
to encourage corodination and communication between different organisation units and lev
as a challenge to improve performance
as a means for training managers
as an early warning system
as a guide to spending
q2
How might the projected transactions impact the company's balance sheet?
please check transaction analysis sheet
q3
Prepare the profit plan in the form of income statement for the first year of operations
please check the prepared income statement
q4
Prepare the balance sheet as of the end of the first year of operations
please check the prepared balance sheet
q5
Hynes made a number of accounting decisions. Do you agree with these decisions?
there are three accounting decisions that require Hynes to exercise judgment. They are
PATENT VALUATION
PATENT AMORTIZATION PERIOD
EQUIPMENT DEPRECIATION PERIOD
hopefully, the patent amortization and depreciation periods represent Hyne's best estimate
g business?
ce sheet?
t year of operations
these decisions?
e judgment. They are