FIN 200 2-27,28, 29 Prepare a statement of cash flows for the Crosby Corporation
Complete Problems 27, 28, and 29 on pp. 51-53.
Foundations of Financial Management: Block Hirt Danielsen
Introduction to Finance: Harvesting the Money Tree: Axia College of University of Phoenix (UoP)
FIN 200 week 1 2-27,28, 29 Crosby Corporation
Cash Flow Preparation
Resource: Ch. 2 of Foundations of Financial Management
Problems 27, 28, and 29 on pp. 51-53.
27 Prepare a statement of cash flows for the Crosby Corporation
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,200,000 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300,000 Gross profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000 Selling and administrative expense . . . . . . . . . . . . . . . . . . . . 420,000 Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000 Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000 Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Earnings available to common stockholders . . . . . . . . . . . . . $ 150,000 Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 120,000 Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25
Income Statement
For the Year Ended December 31, 2008
Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000 Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Earnings available to common stockholders . . . . . . . . . . . . . $ 150,000 Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 120,000 Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25
Statement of Retained Earnings
For the Year Ended December 31, 2008
Retained earnings, balance, January 1, 2008 . . . . . . . . . . . . . . . . . . . . $500,000 Add: Earnings available to common stockholders, 2008 . . . . . . . . . . 150,000 Deduct: Cash dividends declared and paid in 2008 . . . . . . . . . . . . . 50,000 Retained earnings, balance, December 31, 2008 . . . . . . . . . . . . . . . . . $600,000
Comparative Balance Sheets
For 2007 and 2008
Year-End Year-End
2007 2008
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,000 $100,000 Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 350,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,000 430,000 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 30,000 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830,000 910,000 Investments (long-term securities) . . . . . . . . . . . . . . . . . . . 80,000 70,000 Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,400,000 Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . 1,000,000 1,150,000 Net plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,250,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 $ 440,000Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 400,000 Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 50,000 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 720,000 890,000 Long-term liabilities: Bonds payable, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 120,000 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790,000 1,010,000 Stockholders’ equity: Preferred stock, $100 per value . . . . . . . . . . . . . . . . . . . . . . 90,000 90,000 Common stock, $1 par value . . . . . . . . . . . . . . . . . . . . . . . . 120,000 120,000 Capital paid in excess of par . . . . . . . . . . . . . . . . . . . . . . . . 410,000 410,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 600,000 Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . 1,120,000 1,220,000 Total liabilities and stockholders’ equity . . . . . . . . . . . . . . $1,910,000 $2,230,000
28. Describe the general relationship between net income and net cash flows from operating activities for the firm.
29. Has the buildup in plant and equipment been financed in a satisfactory manner? Briefly discuss.
SOLUTION PREVIEW
[EXCEL SHEET]
|
CROSBY CORPORATION
Statement of Cash flows
For the Year ended December 31, 2008
|
||
|
Cash flows from
operating activities:
|
||
|
Net income (earnings after taxes)
|
160,000
|
|
|
Adjustments to determine cash flow
operating activities:
|
||
|
Add back depreciation
|
150,000
|
|
|
Increase in accounts receivable
|
-50,000
|
|
|
Increase in inventory
|
-20,000
|
|
File name: Crosby-Corporation.xls File type: application/vnd.ms-excel Price: $10
