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Preparing a statement of cashflows

1) Prepare an ending 1998 Income Statement and Balance Sheet from the following information: Sales $800,000; Cost of Goods Sold $300,000; Accounts Receivables $20,000; Bonds Outstanding $160,000; Accounts Payable $20,000; Advertising Expense $1,000; Administrative Expenses $35,000; Interest Expense $24,000; Depreciation Expense $40,000; Dividends Paid $137,000; Rent Expense $5,000; Accruals $20,000; Common Stock $100,000; Retained Earnings $245,000 (Beginning 0f 1998); Cash $20,000; Inventory $45,000; Net Fixed Assets $600,000 (Beginning of 1998). (Assume a 40% Tax Rate.)

2) Company XYZ
Balance Sheet
(In Millions)

Jan. 1 Dec. 31 Source Use

ASSETS

Cash $25 $20 _____ _____
Mkt. Sec. 30 22 _____ _____
Accounts Rec. 50 60 _____ _____
Inventory 120 150 _____ _____
Total Curr. Assets $225 $252 _____ _____

Gross Fixed Assets $155 $170 _____ _____
Less: Accum. Dep. (47) (55) _____ _____
Net Fixed Assets $108 $115 _____ _____

Total Assets $333 $367

LIABILITIES

Accounts Payable $41 $35 _____ _____
Notes Payable 30 15 _____ _____
Other Liabilities 19 35 _____ _____
Long Term Debt 21 25 _____ _____
Total Liabilities $111 $110

OWNERS EQUITY

Common Stock $83 $83 _____ _____
Retained Earnings 139 174 _____ _____
Total Equity $222 $257

Total Liab. & OE $333 $367

During the year XYZ purchased an additional $15million worth of fixed assets. The charge for depreciation in 2000 was $8 million. In addition, earnings after tax amounted to 70 million, and the company paid out 35 million in dividends.

Based on the above information, prepare a 2000 statement of cash flows for XYZ.

Solution Preview

Financial Statements

1) Prepare an ending 1998 Income Statement and Balance Sheet from the following information: Sales $800,000; Cost of Goods Sold $300,000; Accounts Receivables $20,000; Bonds Outstanding $160,000; Accounts Payable $20,000; Advertising Expense $1,000; Administrative Expenses $35,000; Interest Expense $24,000; Depreciation Expense $40,000; Dividends Paid $137,000; Rent Expense $5,000; Accruals $20,000; Common Stock $100,000; Retained Earnings $245,000 (Beginning 0f 1998); Cash $20,000; Inventory $45,000; Net Fixed Assets $600,000 (Beginning of 1998). (Assume a 40% Tax Rate.)

2) ...

Solution Summary

Solution helps in preparing an ending 1998 Income Statement and Balance Sheet

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