Carter Corporation Income Stmt and Comparative Balance Sheet Refer to the follow
ID: 2338322 • Letter: C
Question
Carter Corporation Income Stmt and Comparative Balance Sheet
Refer to the following financial statements for Crosby Corporation:
CARTER CORPORATION
Income Statement
For the Year Ended December 31, 20X2
Sales
$
3,000,000
Cost of goods sold
2,544,000
Gross profit
$
456,000
Selling and administrative expense
90,000
Depreciation expense
100,000
Operating income
$
266,000
Interest expense
66,000
Earnings before taxes
$
200,000
Taxes
80,000
Earnings after taxes
$
120,000
Statement of Retained Earnings
For the Year Ended December 31, 20X2
Retained earnings, balance, January 1, 20X2
$
730,000
Add: Earnings available to common stockholders, 20X2
120,000
Deduct: Cash dividends declared and paid in 20X2
100,000
Retained earnings, balance, December 31, 20X2
$
750,000
Comparative Balance Sheets
For 20X2 and 20X1
Year-End
20X2
Year-End
20X1
Assets
Current assets:
Cash
$
50,000
$
55,000
Accounts receivable (net)
350,000
315,000
Inventory
300,000
215,000
Prepaid expenses
0
25,000
Total current assets
$
700,000
$
610,000
Gross plant and equipment
$ 1,800,000
$ 1,470,000
Less: Accumulated depreciation
500,000
400,000
Net plant and equipment
1,300,000
1,070,000
Total assets
$
2,000,000
$
1,680,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
60,000
$
30,000
Notes payable
100,000
60,000
Accrued expenses
140,000
130,000
Total current liabilities
$
300,000
$
220,000
Long-term liabilities:
Bonds payable, 20X2
800,000
580,000
Total liabilities
$
1,100,000
$
800,000
Stockholders’ equity:
Preferred stock, $100 par value
$
0
$
0
Common stock, $1 par value
50,000
50,000
Capital paid in excess of par
100,000
100,000
Retained earnings
750,000
730,000
Total stockholders’ equity
$
900,000
$
880,000
Total liabilities and stockholders’ equity
$
2,000,000
$
1,680,000
Cash Identity Stmt
Cash Flow From Assets
Cash Flow to Creditors
Operating Cash Flow:
Interest Expense
answer
EBIT
Answer
Less: Net New Borrowing (LTD)
answer
+Depreciation
Answer
Cash Flow to Creditors
answer -
- Taxes
Answer
Operating Cash Flow
- answer
Cash Flow to Owners
Less: Net Capital Spending
Dividends(PS)
answer
Ending Fixed Assets - Beginning Fixed Assets
answer
Dividends(CS)
answer
+Depreciation
answer
Less: Net New Borrowing from Owners
- answer
Net Capital Spending
answer -
Cash Flow to Owners
Answer-
Less: Change in Net Working Capital
Ending NWC - Beginning NWC
answer
answer -
CASH FLOW FROM ASSETS
$ answer -
=
CF TO CREDITOR + CF TO OWNERS
$ answer-
CARTER CORPORATION
Income Statement
For the Year Ended December 31, 20X2
Sales
$
3,000,000
Cost of goods sold
2,544,000
Gross profit
$
456,000
Selling and administrative expense
90,000
Depreciation expense
100,000
Operating income
$
266,000
Interest expense
66,000
Earnings before taxes
$
200,000
Taxes
80,000
Earnings after taxes
$
120,000
Explanation / Answer
Cash Identity statement Cash flows from asset Cash flows to creditors Operating Cash flow: Interest expense -66000 EBIT 266000 Less : Net New Borrowing(LTD) 220000 +Depreciation 100000 Cash flows to creditors 154000 -Taxes -80000 Operating Cash flow 286000 Cash flows to Owners Less : Net Capital spending Dividends(preferred stock) 0 Ending Fixed assets-Beginning fixed assets 230000 Dividends(common stock) -100000 Less : Net new borrowing from Owners 0 +Depreciation 100000 Net Capital spending -330000 Cash flows to Owners -100000 Less : Change in Net Working capital Ending NWC-Beginning NWC -10000 Cash flow from assets -54000 Cash flows to creditors + Cash flows to Owners 54000 Note : Cash outflows has been represented with (-)minus sign while cash inflows has positive.
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