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
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
(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.
Block-Hirt-Danielsen: Foundations of Financial Management, 13th Edition II. Financial Analysis and lanning 2. Review of Accounting © The McGraw-Hill Companies, 2009 Chapter 2 Review of Accounting 53
SOLUTION
PREVIEW
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CROSBY CORPORATION
Statement of Cash flows
For the Year ended December 31, 2008
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Cash flows from operating activities:
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Net income (earnings
after taxes)
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160,000
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Adjustments to
determine cash flow operating activities:
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Add back
depreciation
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150,000
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Increase in
accounts receivable
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-50,000
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Increase in
inventory
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-20,000
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Decrease in
prepaid expenses
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20,000
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