Use the Information for the Question(s)below

question 81

Essay

Use the information for the question(s)below.
The Sisyphean Corporation is considering investing in a new cane manufacturing machine that has an estimated life of three years.The cost of the machine is $30,000 and the machine will be depreciated straight line over its three-year life to a residual value of $0.
The cane manufacturing machine will result in sales of 2000 canes in year 1.Sales are estimated to grow by 10% per year each year through year three.The price per cane that Sisyphean will charge its customers is $18 each and is to remain constant.The canes have a manufacturing cost of $9 each.
Installation of the machine and the resulting increase in manufacturing capacity will require an increase in various net working capital accounts.It is estimated that the Sisyphean Corporation needs to hold 2% of its annual sales in cash,4% of its annual sales in accounts receivable,9% of its annual sales in inventory,and 6% of its annual sales in accounts payable.The firm is in the 21% tax bracket,and has a cost of capital of 10%.
-Construct a simple income statement showing the incremental EBIT and the incremental unlevered net income for all three years of the Sisyphean Corporation's project.

Differentiate between private and public corporations and their characteristics.

Recognize the process and accounting treatments for issuing stock above or at par value.

Understand the calculation and significance of retained earnings within stockholders' equity.

Journalize transactions involving the issuance of common and preferred stock.

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Definitions:

Granulosa Cells

Specialized cells found within the ovary that are involved in the development of the oocyte and the production of estrogen.

Theca Folliculi Cells

Cells surrounding the ovarian follicle that work together with granulosa cells to produce estrogen and other substances necessary for egg development.

Clitoris

A sensitive organ located at the front of the vulva in females, composed of erectile tissue and involved in sexual arousal and pleasure.

Female Reproductive System

The system of organs in females involved in producing offspring, including the ovaries, fallopian tubes, uterus, and vagina.