Question

Problem 1: 

The following information (Sin millions) comes from a recent annual report of Amazon.com Inc.: 

Required 

a. Compute Amazon's balance in cash at the beginning of the year 

b. Compute Amazon's total liabilities at the end of the year 

c. Compute Amazon's cost of goods sold for the year 

d. Compute the income before income tax for Amazon 

e. Compare net income (loss) for the year to net cash flow from operating activities. Why are these amounts different? Briefly explain.

Answer 1

SOLUTION

1. Beginning cash balance = Ending cash balance - Increase in cash

= $1,022 - $9

Beginning cash balance = 1,013

2. Assets = Total liabilities + Total Equity

$4,363 = Total liabilities + $431

Total liabilities = $4,363 - $431

Total liabilities = $3,932

3. Gross profit = Net sales - Cost of goods sold

Cost of goods sold = Net sales - Gross profit

= $10,711 - $2,456

Cost of goods sold = $8,255

4. Income before taxes = Revenue - expenses

= $10,711 - $2456 - $2067 -$12

Income before taxes = $6,176