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Statement of cash flows and a balance sheet

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Lansbury Inc. had the following balance Sheet at December 31, 2009.

LANSBURY INC.
BALANCE SHEET
DECEMBER 31, 2009

Cash $ 20,000 Accounts payable $ 30,000
Accounts receivable 21,200 Long-term notes payable 41,000
Investments 32,000 Common stock 100,000
Plant assets (net) 81,000 Retained earnings 23,200
Land 40,000 $194,200
$194,200

During 2010 the following occurred.
1. Lansbury Inc. sold part of its investment portfolio for $15,000. This transaction resulted in a gain of $3,400 for the firm. The company classifies its investments as available-for-sale.
2. A tract of land was purchased for $18,000 cash.
3. Long-term notes payable in the amount of $16,000 were retired before maturity by paying $16,000 cash.
4. An additional $20,000 in common stock was issued at par.
5. Dividends totaling $8,200 were declared and paid to stockholders.
6. Net income for 2010 was $32,000 after allowing for depreciation of $11,000.
7. Land was purchased through the issuance of $30,000 in bonds.
8. At December 31, 2010, Cash was $32,000, Accounts Receivable was $41,600, and Accounts Payable remained at $30,000.

Instructions
(a) Prepare a statement of cash flows for 2010.
(b) Prepare an unclassified balance sheet as it would appear at December 31, 2010.
(c) How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios.

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Solution Summary

The solution explains the preparation of a statement of cash flows and a balance sheet

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Prepare a Balance Sheet, Income Statement, Cash Flows, TVM

See attached file for proper format.

Consider the following financial data for a company (all figures in thousands of dollars except stock price and # of shares):

Balance Sheet Data 12/31/2010 12/31/2009
Cash & Equivalents 500 100
Accounts Receivable 220 200
Inventories 1,000 1,100

Total Fixed Assets 10,750 10,000
Accumulated Depreciation 6,150 6,000
Net Fixed Assets 4,600 4,000

Accounts Payable 400 350
Accruals 70 100
Notes Payable (<1 year) 1,200 1,000
Long Term Debt 2,000 1,700

Common Stock 1,000 1,000
Retained Earnings 1,250

Stock price $30.00 $25.00
# of shares 100,000 100,000

Income Statement Data (2010)

Sales 10,000
Operating expenses excluding depreciation 7,500

Interest expense 120
Income taxes paid 830

Dividends paid 1,000

Construct a complete balance sheet for end of 2009 and 2010, a complete 2010 income statement, and a complete 2010 statement of cash flows. Also, calculate free cash flow for 2010.

1. Compute the following ratios for the financial statements above (use
12/31/2010 balance sheet ratios):
Return on Sales (ROS)
Return on Assets (ROA)
Return on Equity (ROE)
Inventory Turnover
Receivables Turnover
Asset Turnover
Debt
Times interest earned
Current
Quick (acid test)
Market Value
Price to earnings (P/E)
Market to book

2. Solve the following TVM problems (you may use formulas, a calculator, or Microsoft Excel):
a. How much would I need to deposit today in an account earning 10% per year in order to accumulate $10,000 after 5 years? What if my interest was compounded monthly?
b. If I deposit $100 in an account earning 10% per year, how much will my deposit be worth after 5 years? What if we had the same problem but interest is compounded monthly?
c. How much would I have in my retirement account if I deposited $2000 each year for 35 years and I earned 10% on my savings? What about $4,000? Instead, what if I made
monthly deposits of $166.67? How about monthly deposits of $333.33?
d. How much could I afford to borrow for a home if I can make monthly payments of
$12,000 per year for 30 years at 8%? What about monthly payment of $1,000? What if I
wanted to know what my monthly payments would be a $20,000 car loan over five years
at 8%?

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