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Becker Products

Income statement adjustments and statment of cash flows.

Minimum cash balance $14,000

BECKER PRODUCTS
Comparative Balance Sheet
December 31, Year 2, and Year 1

Year 2 Year 1
Assets
Current assets:
Cash $3,000 $22,000
Accounts receivable 120,000 82,000
Inventory 108,000 85,000
Prepaid expenses 5,000 8,000
Total current assets 236,000 197,000
Long-term investments 54,000 74,000
Plant and equipment 436,000 280,000
Less accumulated depreciation 60,000 50,000
Net plant and equipment 376,000 230,000
Total assets $666,000 $501,000

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $72,000 $60,000
Accrued liabilities 19,000 18,000
Total current liabilities 91,000 78,000
Bonds payable 130,000
Deferred income taxes 12,000 10,000

Stockholders' equity:
Preferred stock 82,000 95,000
Common stock 265,000 238,000
Retained earnings 86,000 80,000
Total stockholders' equity 433,000 413,000
Total liabilities and stockholders' equity $666,000 $501,000

BECKER PRODUCTS
Income Statement
For the Year Ended December 31, Year 2

Sales $502,000
cost of goods sold 310,000
Gross margin 192,000
Selling and administrative expenses 156,000
Net operating income 36,000
Non-operating items:
Gain on sale of investments $10,000
Loss on sale of equipment 3,000 13,000
Income before taxes 49,000
Less income taxes 18,000
Net income $31,000

Additional information:
Cash dividends $25,000
Equipment sale 10,000
Equipment cost 25,000
Equipment accumulated depreciation 18,000
Long-term investment cost 20,000
Long-term investment sale 30,000

Check figure:
(1) Net cash provided by operating
activities $3,000

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Solution Summary

The solution explains how to make the income statement adjustments and prepare a statement of cash flows for Becker Products.

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