Carter Corporation Income Stmt and Comparative Balance Sheet Refer to the follow
ID: 2822053 • Letter: C
Question
Carter Corporation Income Stmt and Comparative Balance Sheet
Refer to the following financial statements for Crosby Corporation:
CARTER CORPORATION
Income Statement
For the Year Ended December 31, 20X2
Sales
$
3,000,000
Cost of goods sold
2,544,000
Gross profit
$
456,000
Selling and administrative expense
90,000
Depreciation expense
100,000
Operating income
$
266,000
Interest expense
66,000
Earnings before taxes
$
200,000
Taxes
80,000
Earnings after taxes
$
120,000
Statement of Retained Earnings
For the Year Ended December 31, 20X2
Retained earnings, balance, January 1, 20X2
$
730,000
Add: Earnings available to common stockholders, 20X2
120,000
Deduct: Cash dividends declared and paid in 20X2
100,000
Retained earnings, balance, December 31, 20X2
$
750,000
Comparative Balance Sheets
For 20X2 and 20X1
Year-End
20X2
Year-End
20X1
Assets
Current assets:
Cash
$
50,000
$
55,000
Accounts receivable (net)
350,000
315,000
Inventory
300,000
215,000
Prepaid expenses
0
25,000
Total current assets
$
700,000
$
610,000
Gross plant and equipment
$ 1,800,000
$ 1,470,000
Less: Accumulated depreciation
500,000
400,000
Net plant and equipment
1,300,000
1,070,000
Total assets
$
2,000,000
$
1,680,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$
60,000
$
30,000
Notes payable
100,000
60,000
Accrued expenses
140,000
130,000
Total current liabilities
$
300,000
$
220,000
Long-term liabilities:
Bonds payable, 20X2
800,000
580,000
Total liabilities
$
1,100,000
$
800,000
Stockholders’ equity:
Preferred stock, $100 par value
$
0
$
0
Common stock, $1 par value
50,000
50,000
Capital paid in excess of par
100,000
100,000
Retained earnings
750,000
730,000
Total stockholders’ equity
$
900,000
$
880,000
Total liabilities and stockholders’ equity
$
2,000,000
$
1,680,000
CARTER CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 20X2
Cash flows from operating activities:
Totals
Net income
aNSWER
Adjustments to determine cashflow from operating activities:
Add back depreciation
ANSWER
___________ in accounts receivable
ANSWER
___________ in inventory
ANSWER
___________ in prepaid expenses
ANSWER
___________ in accounts payable
ANSWER
_____________notes payable
ANSWER
___________ in accrued expenses
ANSWER
Total adjustments
ANSWER
Net cash flows from operating activities
ANSWER
Cash flows from investing activities:
ANSWER
______________ plant and equipment
ANSWER
Net cash flows from investing activities
ANSWER
Cash flows from financing activities:
__________ bonds payable
ANSWER
Preferred stock dividends paid
ANSWER
Common stock dividends paid
ANSWER
Net cash flows from financing activities
ANSWER
Net change in cash
ANSWER
CARTER CORPORATION
Income Statement
For the Year Ended December 31, 20X2
Sales
$
3,000,000
Cost of goods sold
2,544,000
Gross profit
$
456,000
Selling and administrative expense
90,000
Depreciation expense
100,000
Operating income
$
266,000
Interest expense
66,000
Earnings before taxes
$
200,000
Taxes
80,000
Earnings after taxes
$
120,000
Explanation / Answer
Statement of Cash Flows - Indirect Method Amount in $ Amount in $ Net income $ 1,20,000 Cash flows from operating activities Adjustments for: Depreciation $ 1,00,000 (Increase) / Decrease in Account receivables $ -35,000 Inventory Decrease / (Increase) $ -85,000 Accounts payable Increase / ( Decrese) $ 30,000 Prepaid Expenses $ 25,000 Accrued Expenses $ 10,000 $ 45,000 Net cash from operating activities $ 1,65,000 Cash flows from investing activities Purchase of Plant and Equipment $ -3,30,000 Net cash used in investing activities $ -3,30,000 Cash flows from Financing activities Issue of Long Term Notes Payable $ 2,20,000 Issue of notes Payable $ 40,000 Dividend Paid $ -1,00,000 Net cash used in financing activities $ 1,60,000 Net increase in cash and cash equivalents $ -5,000 Add :Cash and cash equivalents at beginning of period $ 55,000 Cash and cash equivalents at end of period $ 50,000
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