LAST NAME: _____________ FIRST NAME______________PUID_________________

Please write your name in BLOCK letters and in the format: Last name, First name.

Management 20000 – Introductory Financial Accounting– Spring 2010

Krannert School of Management - Purdue University

Homework 1 – due Friday, January 29, 2010

IMPORTANT: This homework must be turned in on this sheet of pages (please staple). It is preferred that
you print it out two-sided if at all possible. Assignments not completed on this form will not be graded. The
grade for this assignment will be based on the correctness of a partial portion of the assignment – the full
assignment will not be graded. Please print your name and PUID clearly and legibly in the spaces above.

The accountant for Kinney Corporation prepared the following mostly alphabetical list
from the company’s accounting records at the end of 2009 (amounts in millions):

Accounts payable $250 Inventories 430

Accounts receivable 740 Land 2,730

Additional paid-in capital 1,800 Long-term debt
4,700
Cash 1,040 Net sales 15,200
Common Stock* 600 Note payable* 500
Cost of goods sold 7,320 Current portion of long-term debt 300
Dividends* 750 Prepaid expenses 80
Income tax expense 600 Property and equipment, net 6,480
Income taxes payable 150 Retained earnings (12/31/2008) 3,610
Intangible assets 490 Selling and general expense 1,240
Interest expense 490 Short-term investments 510
Unearned revenue* 200 Wage and salary expense 4,410

*Other Information:
1. Dividends declared and paid by Kinney Corporation during 2009 were $750 million.

2. Common stock represents 300,000,000 shares issued and outstanding.

3. The Note payable is due June 23, 2010.

4. Unearned revenue represents cash deposits from customers for goods to be delivered in
2010; it is not revenue for 2009.

HINTS: For the balance sheet, “classified” indicates that you should include
separate totals for current assets and for current liabilities. If done correctly total
assets will be $12,500.
 Note that the retained earnings number provided above is dated as at
12/31/08 and is NOT the number that would appear on the balance sheet dated
12/31/09.
You may want to refer to appendices B and C of the text for examples and
account titles.
Homework 1 continued over ….
Homework 1 continued.
Required:
a. Complete the Income Statement below (Include earnings per share):

Kinney Corporation
Income Statement
For the year ended December 31, 2009
(Amounts in $millions)

b. Complete the statement of retained earnings below:

Kinney Corporation
Statement of Retained Earnings
For the year ended December 31, 2009
(Amounts in $millions)
 Home work 1 continued over ….
Homework 1 continued.
c. Complete the classified Balance Sheet below:

Kinney Corporation
Balance Sheet
As at December 31, 2009
(Amounts in $millions)
 Homework 1 continued over ….
Homework 1 continued.
d. The value of the inventory reported by Kinney Corporation on its balance sheet dated
12/31/08 was $360 million. All inventory purchased during 2009 was purchased on
account. What was the amount of inventory purchased on account during 2009? Hint: you
will need to use Cost of goods sold.

e. Kinney Corporation reported Accounts payable on its balance sheet dated 12/31/08 of
$370 million. How much cash did Juniper Corporation pay to suppliers for inventory
during 2009?

f. Kinney Corporation reported Income tax payable on its balance sheet dated 12/31/08 of
$60 million. How much income tax did Kinney Corporation pay in cash during 2009?
Hint: you will need to use Income tax expense.
 Homework 1 continued over ….
Homework 1 continued.
g. How much working capital does Kinney Corporation have as at December 31, 2009?

h. What is Kinney Corporation’s current ratio as at December 31, 2009?

i. What is Kinney Corporation’s profit margin ratio (Return on sales) for the year ended
December 31, 2009?