Comparative Statements of Income & Balance Sheets For Scottsdale Machined Parts,
ID: 2473049 • Letter: C
Question
Comparative Statements of Income & Balance Sheets For Scottsdale Machined Parts, Inc., are as follows:
Scottsdale Machined Parts, Inc. Consolidated Statements of Income For the Last Two Fiscal Years of Operations (000’s $)
20x3
Net Sales $582,500
Cost of Sales 285,000
Gross Profit 297,500
Operating Expenses
Depreciation Expense 20,750
Other Expenses 132,400 153,150
Operating Profit 144,350
G(L) on Sale of Assets (5,125)
Income Before Taxes 139,225
Provision for Taxes 24,250
Net Income $114,975
Additional Information for 20x3:
20x3
Cost of Equipment Sold During the Year $ 46,875
Accumulated Depreciation of Equipment Sold 30,125
Cash Received for Equipment Sold 11,625
Loss on the Sale of Equipment 5,125
Purchased Equipment During the Year 96,375
Cash Paid for Purchased Equipment 30,000
Long-Term Note Payable for Balance of Equipment 66,376
Borrowed Cash by Signing Short-Term Note Pay 4,000
Paid Cash to Reduce Long-Term Note Payable 50,125
Issued 2,500 Shares of Common Stock for Cash 50,000
Declared and Paid Cash Dividends ?
Scottsdale Machined Parts, Inc. Consolidated Balance Sheets For the Last Two Fiscal Years of Operations
20x3 20x2
Assets:
Current Assets Cash & Cash Equivalents $ 49,800 $ 73,500
Accounts Receivable, Net 65,810 50,625
Inventories 275,656 251,800
Prepaid Expense 1,250 1,875
Total Current Assets 392,516 377,800
Property, Plant & Equipment
Plant & Equipment 157,500 108,000
Less: Accumulated Depreciation (36,625) (46,000)
Net Property, Plant & Equipment 120,875 62,000
Total Assets $513,391 $439,800
Liabilities & Equity:
Current Liabilities
Accounts Payable $ 53,141 $114,675
Short-Term Note Payable 10,000 6,000
Total Current Liabilities 63,141 120,675
Long-Term Liabilities
Long-Term Notes Payable 65,000 48,750
Total Liabilities 128,141 169,425
Stockholders’ Equity
Common Stock, $5 Par Val 162,750 150,250
Capital in Excess of Par 37,500 0
Retained Earnings 185,000 120,125
Total Stockholders’ Equity 385,250 270,375
Total Liabilities & Equity $513,391 $439,800
Based upon the Income Statement, Additional Information and Balance Sheet data, complete the Statement of Cash Flows.
Scottsdale Machined Parts, Inc. Consolidated Statement of Cash Flows For the Last Fiscal Year of Operations
Cash Flows from Operating Activities
Net Income _________
Adjustments to Reconcile Net Income
To Net Cash Provided by Operations
Depreciation Expense _________
(Gain)Loss on Sale of Assets _________
Net Changes, Oper Assets & Liabilities
(Incr)Decr Accounts Receivable _________
(Incr)Decr Inventories _________
(Incr)Decr Prepaid Expenses _________
Incr(Decr) Accounts Payable _________
Net Cash Provided by Operating Activities _________
Cash Flows from Investing Activities
Cash Received from Sale of Equipment _________
Cash Paid for Equipment _________
Net Cash Resulting from Investing Activities _________
Cash Flows from Financing Activities
Cash Borrowed on Short-Term Note _________
Cash Paid on Long-Term Note _________
Cash Received from Issuing Stock _________
Cash Paid for Dividends _________
Net Cash Resulting from Financing Activities _________
Net Incr(Decr) in Cash _________
Cash & Cash Equivalents at Beginning of Year _________
Cash & Cash Equivalents at End of Year _________
Part II. Analyze and discuss the Statement of Cash Flows for Scottsdale Machined Parts, Inc. Address what actions could have been take to mitigate the net decrease in cash.
Explanation / Answer
Cash Flows from Operating Activities
Net Income _________ 114975
Adjustments to Reconcile Net Income
To Net Cash Provided by Operations
Depreciation Expense _________ 20750
(Gain)Loss on Sale of Assets _________ 5125
Net Changes, Oper Assets & Liabilities
(Incr)Decr Accounts Receivable _________ -15185
(Incr)Decr Inventories _________ -23856
(Incr)Decr Prepaid Expenses _________ 625
Incr(Decr) Accounts Payable _________ -61534
Net Cash Provided by Operating Activities _________ 40900
Cash Flows from Investing Activities
Cash Received from Sale of Equipment _________ 11625
Cash Paid for Equipment _________ -30000
Net Cash Resulting from Investing Activities _________ -18375
Cash Flows from Financing Activities
Cash Borrowed on Short-Term Note _________ 4000
Cash Paid on Long-Term Note _________ -50125
Cash Received from Issuing Stock _________ 50000
Cash Paid for Dividends _________ -50100
Net Cash Resulting from Financing Activities _________ -46225
Net Incr(Decr) in Cash _________ -23700
Cash & Cash Equivalents at Beginning of Year _________ 73500
Cash & Cash Equivalents at End of Year _________ 49800
II. By verifying the above details the cash shortage is on account of company not availing or lesser credit period with suppliers and it is not in line with collection.
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