INSTRUCTIONS: Using the financial information below, prepare a proper cash flow
ID: 2547578 • Letter: I
Question
INSTRUCTIONS: Using the financial information below, prepare a proper cash flow statement, including any necessary disclosures. COMPARATIVE BALANCE SHEET Year 2 Year 1 Cash 133,000 195,000 Accounts Receivable 372,000 110,000 Allowance for Doubtful Accounts (20,000) (10,000) Inventory 395,000 155,000 Reserve for Obsolete Inventory (5,000) (5,000) Prepaid Expenses 15,000 - Equipment, net 155,000 165,000 Total Assets 1,045,000 610,000 Accounts Payable 81,000 100,000 Corporate Income Taxes Payable 78,000 29,000 Accrued Expenses 105,000 5,000 Notes Payable 234,000 300,000 Common Stock, no par 160,000 100,000 Retained Earnings 387,000 76,000 1,045,000 610,000 INCOME STATEMENT Sales, net 1,925,000 Cost of Goods Sold 660,000 Gross Profit 1,265,000 Operating Expenses 785,000 EBITDA 480,000 Depreciation Expense 35,000 EBIT 445,000 Interest Expense 22,000 EBT 423,000 Income Tax Expense 77,000 Net Income 346,000 STATEMENT OF RETAINED EARNINGS Beginning Retained Earnings 76,000 Add: Net Income 346,000 Less: Dividends (35,000) Ending Retained Earnings 387,000 ADDITIONAL INFORMATION There was no interest to accrue in either years 1 or 2 Several income tax payments were made throughout year 2, totalling $56,000 A vehicle was purchased in December year 2 for $25,000 Common stock was issued to admit a new shareholder Prepaid expenses consisted of insurance payments paid up front There was no new debt contracts entered into during year 2 INSTRUCTIONS: Using the financial information below, prepare a proper cash flow statement, including any necessary disclosures. COMPARATIVE BALANCE SHEET Year 2 Year 1 Cash 133,000 195,000 Accounts Receivable 372,000 110,000 Allowance for Doubtful Accounts (20,000) (10,000) Inventory 395,000 155,000 Reserve for Obsolete Inventory (5,000) (5,000) Prepaid Expenses 15,000 - Equipment, net 155,000 165,000 Total Assets 1,045,000 610,000 Accounts Payable 81,000 100,000 Corporate Income Taxes Payable 78,000 29,000 Accrued Expenses 105,000 5,000 Notes Payable 234,000 300,000 Common Stock, no par 160,000 100,000 Retained Earnings 387,000 76,000 1,045,000 610,000 INCOME STATEMENT Sales, net 1,925,000 Cost of Goods Sold 660,000 Gross Profit 1,265,000 Operating Expenses 785,000 EBITDA 480,000 Depreciation Expense 35,000 EBIT 445,000 Interest Expense 22,000 EBT 423,000 Income Tax Expense 77,000 Net Income 346,000 STATEMENT OF RETAINED EARNINGS Beginning Retained Earnings 76,000 Add: Net Income 346,000 Less: Dividends (35,000) Ending Retained Earnings 387,000 ADDITIONAL INFORMATION There was no interest to accrue in either years 1 or 2 Several income tax payments were made throughout year 2, totalling $56,000 A vehicle was purchased in December year 2 for $25,000 Common stock was issued to admit a new shareholder Prepaid expenses consisted of insurance payments paid up front There was no new debt contracts entered into during year 2Explanation / Answer
Cash Flow Statement for the year 2 Net Profit for the Year 346000 Cash Flow from Operating Activity Increase in net Accounts Receivables 352000 100000 -252000 Increase in Inventory -240000 Increase in Prepaid expenses -15000 Decrease in Accounts Payable -19000 Increase in Corporate income tax payable 49000 Increase in Accrued Expenses 100000 Decrease in Notes Payable -66000 A Net Cash Flow from Operating Activities -97000 Cash Flow from Investing Activity Sale of Equipment 10000 B Net cash Flow from Investing Activities 10000 Cash Flow from Financing Activity Issue of Share Capital 60000 Dividend Paid -35000 C Net cash Flow from Financing Activities 25000 Net Cash Increase/Decrease A+B+C -62000 Opening Balance of Cash 195000 Closing Balance of Cash 133000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.