A. Create the Income Statements for 2007 and 2008 (including dividends paid and
ID: 2371642 • Letter: A
Question
A. Create the Income Statements for 2007 and 2008 (including dividends paid and retained earnings).
B. Create the Balance Sheets for 2007 & 2008. Remember that the Owner’s Equity section. A+L+OE, so OE=total A - total L.
C. Create the statement of Cash Flows for 2008.
D. What is the CFFA for 2008?
1. Use the below information to answer the following questions: 2007 2008 Sales $2,870 $3,080 Depreciation 413 413 Cost of goods sold 987 1121 Other Expenses 238 196 Interest 192 221 Cash 1505 1539 Accounts Receivables 1992 2244 Short-term Notes Payable 291 273 Long-term debt 5040 5880 Net fixed assets 12,621 12,922 Accounts Payable 1581 1533 Tax rate 34% 34% Inventory 3542 3640 *Payout ratio 52% 52%Explanation / Answer
A. Income Statement 2007
Sales $2870
COGS ($987)
Depreciation ($413)
Gross Profit $1470
Other Expenses ($238)
Operating Income $1232
Interest Expense ($192)
Pretax Income $1040
Income Tax Expense ($353.60) [income tax exp. = pretax income X 34% (tax rate)]
Net Income $686.40
Retained Earnings Beg. Bal. $12746.60
Net Income $686.40
Dividends ($356.93) (Net Income * 52%)
Retained Earnings End. Bal. $13076.07
Income Statement 2008
Sales $3080
COGS ($1121)
Depreciation ($413)
Gross Profit $1546
Other Expenses ($196)
Operating Income $1350
Interest Expense ($221)
Pretax Income $1129
Income Tax Expense ($383.86) [income tax exp. = pretax income X 34% (tax rate)]
Net Income $745.14
Retained Earnings Beg. Bal. $13076.07
Net Income $745.14
Dividends ($387.47) (Net income * 52%)
Retained Earnings End. Bal. $13433.74
B. Balance Sheet 2007
ASSETS
Cash $1539
Accounts Receivable $2244
Inventory $3640
Net Fixed Assets $12922
Total Assets $20345
LIABILITIES
Accounts Payable $1581
Short Term Notes Payable $291
Long Term Debt $5040
Total Liabilities $6912
STOCKHOLDERS' EQUITY
Retained Earnings $13076.07 (Solved for based on Total SE - Div = Ret Earn)
Dividends 356.93
Total Stockholders' Equity $13433 (Solved for based on A - L = SE)
Balance Sheet 2008
ASSETS
Cash $1505
Accounts Receivable $1992
Inventory $3542
Net Fixed Assets $12,621
Total Assets $19660
LIABILITIES
Accounts Payable $1533
Short Term Notes Payable $273
Long Term Debt $5880
Total Liabilities $7686
STOCKHOLDERS' EQUITY
Retained Earnings $11586.53 (Solved for based on Total SE - Div = Ret Earn)
Dividends $387.47
Total Stockholders' Equity $11974 (Solved for based on A - L = SE)
C. 2008 Statement of Cash Flows
Cash (Beg. Bal.) $1539
Cash Flow from Operating Activities Net Income $745.14
Depreciation $413
Accounts Receivable ($252) [subtract rise in accounts receivable from '07 to '08]
Accounts Payable ($48) [subtract rise in accounts receivable from '07 to '08]
Total Cash Flow from Operating Activities $858.14
Investing Cash Flow Net Fixed Assets ($301)
Cash Flow from Financing Activities
Dividends ($387.47)
Cash (End. Bal.) $1708.67
D. CFFA for 2008 = $858.14 - 301 - 387.47 = $169.67
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