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    Create cash flow from financial statements

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    AC1420 Exercise 4.2

    The following calculations will be based on the income statement and the balance sheet provided:
    The net cash flow from operating activities
    The net cash flow from investing activities
    The net cash flow from financing activities

    Comparative Balance Sheet for the Years 2009 and 2010
    12/31/2009 12/31/2010
    Assets Amount in Dollars
    Current Assets:
    Cash 30,000.00 40,000.00
    Marketable Securities 10,000.00 10,000.00
    Accounts Receivable 170,000.00 200,000.00
    Inventory 160,000.00 180,000.00
    Prepaid Expenses 30,000.00 20,000.00
    400,000.00 450,000.00
    Long Term investments 20,000.00 50,000.00
    Plant and Equipment 1,000,000.00 1,100,000.00
    Less Accumulated Depreciation 550,000.00 600,000.00
    Net Plant and Equipment 450,000.00 500,000.00
    Total Assets 870,000.00 1,000,000.00
    Liabilities and Stockholders' Equity
    Current Liabilities
    Accounts Payable 45,000.00 80,000.00
    Notes Payable 100,000.00 100,000.00
    Accrued Expenses 35,000.00 30,000.00
    180,000.00 210,000.00
    Long Term Liabilities
    Bonds Payable, 2020 40,000.00 90,000.00

    Total Liabilities 220,000.00 300,000.00
    Stockholders' Equity
    Preferred Stock 50,000.00 50,000.00
    Common Stock 100,000.00 100,000.00
    Capital Paid in Excess of Par 250,000.00 250,000.00
    Retained Earnings 250,000.00 300,000.00
    Total Stockholders' Equity 650,000.00 700,000.00
    Total Liabilities and Stockholders' Equity 870,000.00 1,000,000.00
    Income Statement for the year ended 12/31/2011
    Amount in Dollars
    Sales 2,000,000.00
    Cost of Goods Sold 1,500,000.00
    Gross Profit 500,000.00
    Selling and Administrative Expenses 270,000.00
    Depreciation Expense 50,000.00
    Operating Profit (EBIT) 180,000.00
    Interest Expense 20,000.00
    Earnings Before Taxes 160,000.00
    Taxes 49,500.00
    Net Income 110,500.00
    Notes:
    Dividends Paid to Preferred Stockholders 10,500.00
    Cash Dividend to Common Stockholders 50,000.00

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    Solution Summary

    In the following posting, a cash flow statement with the subtotals for each of the three sections is created in Excel. Equations are available in the Excel spreadsheet.

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