Chapter 3 presents financial statements over the period 2008-2011 for R&E Suppli

Question

Chapter 3 presents financial statements over the period 2008-2011 for R&E Supplies, Inc.

a. Construct a sources and uses statement for the company over this period (one statement for all three years)

b. What insights, if any, does the sources and uses statement give you about the financial position of R&E Supplies?

Income Statements Net sales Cost of goods sold Gross profit Expenses: 2010 $16,104 13,688 2,416 2011* $20,613 17,727 2,886 $11,190 9,400 1,790 $13,764 11,699 General, selling, and administrative expenses Net interest expense 1,019 100 671 1,239 103 723 1,610 110 696 90 529 Earnings before tax 313 Earnings after tax S 369 S 398 S 383 $ 291 Balance Sheets Current assets: Cash and securities Accounts receivable Inventories Prepaid expenses S 671 1,343 1,119 14 3,147 128 S 3,275 S 551 1,789 1,376 S 644 2,094 1,932 S 412 2,886 Total current assets 3,728 124 3,852 4,685 295 S 4,980 5,583 Net fixed assets Total assets Liabilities and 0wners' Equity Current liabilities: S 5,870 Bank loan Accounts payable Current portion long-term debt Accrued wages S 50 1,007 60 S 50 1,443 50 S 50 2,426 50 S 50 3,212 100 Total current liabilities 1,550 910 150 1,242 3,852 1,122 2,536 Long-term debt Common stock Retained earnings Total liabilities and owners' equity 150 1,043 S 3,275 150 1,434 S 4,980 3,380 760 150 1,580 S 5,870

Explanation / Answer

Source and Use of funds statement 2009 2010 2011 Source of funds: Current Liabilities 428 986 844 (1550-1122) (2536-1550) (3380-2536) Long term debt -50 -50 -100 (910-960) (860-910) (760-860) Common Stock 0 0 0 (150-150) (150-150) (150-150) Reatined Earnings 199 192 146 (1242-1043) (1434-1242) (1580-1434) Total 577 1128 890 Use of funds : Current Assets 581 957 898 (3728-3147) (4685-3728) (5583-4685) Net Fixed Assets -4 171 -8 (124-128) (295-124) (287-295) Total 577 1128 890

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