Preparing a cash flow and answer the following questions?

Prepare a statement of cash flows for the Crosby Corporation. Follow the general procedures indicated in Table 2–10 on page 38 CROSBY CORPORATION Income Statement For the Year Ended December 31, 2008 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,200,000 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300,000 Gross profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000 Selling and administrative expense . . . . . . . . . . . . . . . . . . . . 420,000 Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000 Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000 CROSBY CORPORATION Income Statement For the Year Ended December 31, 2008 Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000 Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 Earnings available to common stockholders . . . . . . . . . . . . . $ 150,000 Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 120,000 Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25 Statement of Retained Earnings For the Year Ended December 31, 2008 Retained earnings, balance, January 1, 2008 . . . . . . . . . . . . . . . . . . . . $500,000 Add: Earnings available to common stockholders, 2008 . . . . . . . . . . 150,000 Deduct: Cash dividends declared and paid in 2008 . . . . . . . . . . . . . 50,000 Retained earnings, balance, December 31, 2008 . . . . . . . . . . . . . . . . . $600,000 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 $ 440,000 Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 400,000 Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 50,000 Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 720,000 890,000 Long-term liabilities: Bonds payable, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 120,000 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790,000 1,010,000 Comparative Balance Sheets For 2007 and 2008 Year-End 2007 Year-End 2008 Assets Current assets: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,000 $ 100,000 Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 350,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,000 430,000 Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 30,000 Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830,000 910,000 Investments (long-term securities) . . . . . . . . . . . . . . . . . . . 80,000 70,000 Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,400,000 Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . 1,000,000 1,150,000 Net plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,250,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000 Stockholders’ equity: Preferred stock, $100 per value . . . . . . . . . . . . . . . . . . . . . . 90,000 90,000 Common stock, $1 par value . . . . . . . . . . . . . . . . . . . . . . . . 120,000 120,000 Capital paid in excess of par . . . . . . . . . . . . . . . . . . . . . . . . 410,000 410,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 600,000 Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . 1,120,000 1,220,000 Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000 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.

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