The December 31, 2013, balance sheet of Schism, Inc., showed long-term debt of $
ID: 2821390 • Letter: T
Question
The December 31, 2013, balance sheet of Schism, Inc., showed long-term debt of $1,400,000, $140,000 in the common stock account and $2,650,000 in the additional paid-in surplus account The December 31 2014, balance sheet showed long-term debt of $1,580,000, $150,000 in the common stock account and $2,950,000 in the additional paid-in surplus account. The 2014 income statement showed an interest expense of $94,000 and the company paid out $145,000 in cash dividends during 2014. The firm's net capital spending for 2010 was $960,000, and the firm reduced its net working capital investment by $125,000. (Enter your answer as directed, but do not round intermediate calculations.) Required: What was the cash flow to creditors during 2014? (Negative amount should be indicated by a minus sign. Enter your answer in dollars, not millions of dollars (e.g. 1234567) to Required What was the firm's cash flow to stockholders during 2014? (Negative amount should be indicated by a minus sign. Enter your answer in dollars, not millions of dollars (e.g-1.234,567)) Cash flow to stockholders Required What was the firm's cash flow from assets during 2014? (Negative amount should be indicated bya minus sign. Enter your answer in dollars, not millions of dollars (e.g. 1,234.567)) Required What was the firm's operating cash flow during 2014? (Enter your answer in dollars, not millions of dollars (e.g., 1,234,567))Explanation / Answer
Net New Debt = Ending Long-term Debt - Beginning Long-term Debt
Net New Debt = $1,580,000 - $1,400,000
Net New Debt = $180,000
Cash Flow to Creditors = Interest Expense - Net New Debt
Cash Flow to Creditors = $94,000 - $180,000
Cash Flow to Creditors = -$86,000
Net New Equity = (Ending Common Stock + Ending Additional Paid-in Capital) - (Beginning Common Stock + Beginning Additional Paid-in Capital)
Net New Equity = ($150,000 + $2,950,000) - ($140,000 + $2,650,000)
Net New Equity = $310,000
Cash Flow to Stockholders = Dividend - Net New Equity
Cash Flow to Stockholders = $145,000 - $310,000
Cash Flow to Stockholders = -$165,000
Cash Flow from Assets = Cash Flow to Creditors + Cash Flow to Stockholders
Cash Flow from Assets = -$86,000 - $165,000
Cash Flow from Assets = -$251,000
Cash Flow from Assets = Operating Cash Flow - Net Capital Spending - Change in Net Working Capital
-$251,000 = Operating Cash Flow - $960,000 - (-$125,000)
Operating Cash Flow = $584,000
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