FIN 200 wk-1 2-27,28, 29 Prepare a statement of cash flows for the Crosby Corporation Complete Problems 27, 28, and 29 on pp. 51-53.

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

                                                            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

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