Consider the following abbreviated financial statements for Weston Enterprises:

Question

Consider the following abbreviated financial statements for Weston Enterprises: (Do not round intermediate calculations.)

In 2012, Weston Enterprises purchased $1,830 in new fixed assets. How much in fixed assets did Weston Enterprises sell?

In 2012, what is the cash flow from assets for the year? (The tax rate is 35 percent.)

During 2012, Weston Enterprises raised $390 in new long-term debt. What is the cash flow to creditors?

What is the cash flow to creditors?

Everything is right except I cannot figure out cash flow to creditors and cash flow from assets. Thank you.

Consider the following abbreviated financial statements for Weston Enterprises: (Do not round intermediate calculations.)

Explanation / Answer

Answer a Owners Equity = Current Assets + Net Fixed assets - Current Liabilities - Long term debt Owners Equity for 2011 = $928 + $3977 - $370 - $2012 = $2523 Owners Equity for 2012 = $1012 + $4564 - $395 - $2152 = $3029 Answer b Change in net working Capital = (Current asset for 2012 - Current Liabilities for 2012) - (Current asset for 2011 - Current Liabilities for 2011) Change in net working Capital = ($1012 - $395) - ($928 - $370) = $59 Answer c1 Fixed asset sold = Net fixed asset on 2011 + Purchase during 2012 - Depreciation for 2012 - Net fixed asset on 2012 = $3977 + $1830 - $1040 - $4564 = $203 Answer c2 Calculation of Net income after tax for 2012 Sales $11,485.00 (-) Costs $5,605.00 (-) Depreciation $1,040.00 (-) Interest paid $180.00 Net Income $4,660.00 (-) Tax @ 35% $1,631.00 Profit after tax $3,029.00 (+) Depreciation $1,040.00 Operating Cash flow $4,069.00 Cash flow from assets for 2012 = OCF - Net Capital spending - Change in NWC = $4069 - $1830 - $59 = $2180 Answer d1 Debt retired = Long term debt on 2011 + Debt raised during 2012 - Long term debt on 2012 = $2012 + $390 - $2152 = $250 Answer d2 Cash flow to creditors = Current liabilities on 2011 + Costs incurred during 2012 -Current liabilities on 2012 = $370 + $5605 -$395 = $5580

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