Question

Problem 1 (100 pts) PIZHAMKA Inc. is a cloth retailer that had the following items on the Balance Sheet in year 2019: • Retained Earnings - $755 • Inventory - $250 (bought 25 units of pizhamka from Aliexpress) • Cash - $40 • Receivables - $25 • Payables - $60 • Shareholder's Equity - $100 • Debt - $200 (bullet type debt that should be repaid in 2022, with annual interest rate of 10%) PP&E - $800 During Year 2020 PIZHAMKA Inc. sold 20 units of pizhamka at price of $80 per unit. Also all Receivables and Payables has been paid out during the year 2020. Assume the corporate income tax rate is 20% and depreciation (assume it's part of operational expense) is 20% per year. Dividend payout ratio of PIZHAMKA Inc. is promised to be 25% per annum for the next 5 years. a) (12 pts) Buid up the Balance Sheet of PIZHAMKA Inc. as of the end of Year 2019. b) (24 pts) Show the P&L, Cash Flow Statement of PIZHAMKA Inc. for the Year 2020 and the Balance Sheet of PIZHAMKA Inc. as of the end Year 2020. During Year 2021 PIZHAMKA Inc. sold 5 units of previous year collection of pizhamka at price of $40 per unit and 10 units of 2021 year collection of pizhamka at price of $80 per unit. The 2021 year collection of pizhamka was not bought from Aliexpress, but was instead manufactured by Russian children in Himki district. One Russian child got a wage of 7$ per 1 pizhamka. Moreover, one supervisor (Vasiliy, ex prisoner, 55 years old) was hired in order to control Russian children, he was paid a fix salary of $22 for that. c) (32 pts) Show the P&L, Cash Flow Statement of PIZHAMKA Inc. for the Year 2021 and the Balance Sheet of PIZHAMKA Inc. as of the end Year 2021. During Year 2022 PIZHAMKA Inc. obtained gross profit of $1000. At the very beginning of 2022 PIZHAMKA Inc. fired Vasiliy and bought video cameras that costed $100 and have the expected lifetime period of 10 years with $10 residual value. Moreover, the company repaid debts. d) (32 pts) Show the P&L, Cash Flow Statement of PIZHAMKA Inc. for the Year 2022 and the Balance Sheet of PIZHAMKA Inc. as of the end Year 2022.

Answer 1

a
PIZHAMKA lnc
Balance Sheet as on 31.12.2019
Liabilities	Amount	Assets	Amount
Share holder's Equity	$     100.00	PP&E	$           800.00
Retained Earnings	$     755.00	Inventory	$           250.00
Debt	$     200.00	Receivables	$             25.00
Payables	$       60.00	Cash	$             40.00
	$ 1,115.00		$       1,115.00
b
Profit and Loss Account for the year ended 31.12.2020
Dr			Cr
Particulars	Amount	Particulars	Amount
Opening Stock	250	Sales	1600
		Closing Stock	50
Interest on Debt at10%	20
Depreciation on PP&E at 20%	160
Net profit before income tax	1220
	1650		1650
Income tax at 20%	244
Netprofit after income Tax	976
	1650		1650
PIZHAMKA lnc
Balance Sheet as on 31.12.2020
Liabilities	Amount	Assets	Amount
Share holder's Equity	100	PP&E	640
Retained Earnings	1487	Inventory	50
Debt	200	Receivables	0
Interest payable	20
Dividend Payable	244	Cash	1361
	2051		2051
PP&E
Opening	800
Depreciation on PP&E at 20%	160
WDV	640
Closing Stock
Particulars	Units	Amount	Price per unit
Opening Stock	25	250	10
Sale	20	1600	80
Closing Inventory	5	50	10
It was assumed that the income tax has been paid by cash
All sales were cash sales

Cash Flow Statement
Cash Flow from Operating Activities	Amount
Netprofit before income Tax	976.00
Adjustments to reconcile net cash provided by operating activities
Income tax paid	-244
Depreciation	160
Operating profit before Working capital Changes	892.00
Decrease in Receivables	$                             25.00
Decrease in Inventory	$                           200.00
Decrease in Payables	$                            -60.00
Increase in Interest Payable	$                             20.00
Increae in Dividend payable	$                           244.00
Net Cash flow	1,321.00
Cash Balance at beginning	$                             40.00
Cash Balance at end	1,361.00