Question

Prepare a statement of cash flows for the Crosby Corporation. Follow general rules.?

Sales for the yr 2008 were $330.000, with COG sold being 60% of sales. Selling and admin expense was $33,000. Depreciation expense was 10%, while interest on bonds payable was 12%. these based on Dec 31, 2007 balances. Tax rate averaged 20%.

$2,000 in preferred stock dividends were paid and $4,100 in dividens wer paid to common stockholders. There were 10,000 shares of commom stock outstanding.

During 2008, cash balance and prepaid expenses balance were unchanged. Accounts receivable & inventory increased by 20%. A new machine was purchased on Dec. 31, 2008 at $60,000.

Accounts payable increased by 30%. At yr end, Dec. 31, 2008, notes payable increased by $10,000 and bonds payable decreased by $15,000. Common stock & paid-in capital in excess of par accounts did not change.

a. prepare income statement for yr 2008.
b. prepare a statement of retained earnings for yr 2008.
c. prepare a balance sheet as of Dec. 31, 2008.

27. Prepare a statement of cash flows for the Crosby Corporation and follow general procedures.

Prepare a statement of cash flows for the Crosby Corporation?
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
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

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

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
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 . . . . . . . . . .

4 years ago - 1 answers

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CROSBY CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2008

Cash flows from operating activities:
Net income (earnings after taxes) 160,000
Adjustments to determine cash flow from operating activities:
Add back depreciation 150,000
Increase in accounts receivable (50,000)
Increase in inventory (20,000)
Decrease in prepaid expenses 20,000
Increase in accounts payable 190,000
Decrease in accrued expenses (20,000)
Total adjustments 270,000
Net cash flows from operating activities 430,000

Cash flows from investing activies:
Decrease in investments (long-term securities) 10,000
Increase in plant and equipment (400,000)
Net cash flows from investing activities (390,000)

Cash flows from financing activities:
Increase in bonds payable 50,000
Preferred stock dividends paid (10,000)
Common stock dividends paid (50,000)
Net cash flows from financing activities (10,000)

Net increase in cash flows 30,000

4 years ago