Search here for Tutorials
If the Data is different in your question, please send your questions to homeworksolutionsnow@gmail.com. The questions will be answered at the same price.

Prepare a statement of cash flows for the Crosby Corporation. Follow the general procedures indicated in Table 2-10 on page 38.

FIN 200 2-27,28, 29  Crosby Corporation

2-27 Prepare a statement of cash flows for the Crosby Corporation. Follow the general procedures indicated in Table 2-10 on page 38.
 
Statement of cash flows (L04)
Current Assets Liabilities
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,000 Accounts payable . . . . . . . . $ 20,000
Accounts receivable . . . . . . . . . . . . . 22,500 Notes payable . . . . . . . . . . . 30,000
Inventory . . . . . . . . . . . . . . . . . . . . . . 37,500 Bonds payable . . . . . . . . . . . 75,000
Prepaid expenses . . . . . . . . . . . . . . . 18,000
Fixed Assets Stockholders' Equity
Plant and equipment (gross) . . . . . . . $375,000 Common stock . . . . . . . . . . $112,500
Paid-in capital . . . . . . . . . . . 37,500
Less: Accumulated depreciation . . . . 75,000 Retained earnings . . . . . . . . 118,000
Net plant and assets . . . . . . . . . . . . . 300,000 Total liabilities and
Total assets . . . . . . . . . . . . . . . . . . . . $393,000 stockholders' equity . . . . . $393,000
continued

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

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

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
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 $ 440,000
Notes 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

Comparative Balance Sheets For 2007 and 2008
Year-End 2007
Year-End 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
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

Block-Hirt-Danielsen: Foundations of Financial Management, 13th Edition II. Financial Analysis and Planning
2. Review of Accounting © The McGraw-Hill Companies, 2009 Chapter 2 Review of Accounting 53
www.mhhe.com/bhd13e W E B E X E R C I S E
(The following questions apply to the Crosby Corporation, as presented in problem 27.)

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
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