Score:
100/100
Points
100
%
1.
Award: 25 out of 25.00 points
Given is the Income Statement for the year ended December 31, 20XX, Statement of Retained Earnings for the year ended
December 31, 20XX and Comparative Balance Sheets for 20XW and 20XX of Maris Corporation:
Maris Corporation
Income Statement
Year Ended December 31, 20XX
Sales
Cost of goods sold
$4,100,000
2,475,000
Gross profits
Selling and administrative expense
Amortization expense
1,625,000
570,000
230,000
Operating income
Interest expense
825,000
46,000
Earnings before taxes
Taxes
779,000
470,000
Earnings after taxes
309,000
Preferred stock dividends
40,000
Earnings available to common shareholders
$269,000
Shares outstanding
Earnings per share
269,000
$1.00
Statement of Retained Earnings
For the Year Ended December 31, 20XX
Retained earnings, balance, January 1, 20XX
Add: Earnings available to common shareholders, 20XX
Deduct: Cash dividends declared and paid in 20XX
$860,000
269,000
150,000
Retained earnings, balance, December 31, 20XX
$979,000
Comparative Balance Sheets
For 20XX and 20XW
December 31, 20XX
Assets
Current assets:
Cash
Accounts receivable (net)
Inventory
Prepaid expenses
Total current assets
Investments (long-term securities)
Plant and equipment
Less: Accumulated depreciation
Net plant and equipment
December 31, 20XW
$120,000
570,000
510,000
32,000
$105,000
558,000
486,000
64,000
1,232,000
100,000
1,213,000
109,000
2,200,000
997,000
1,800,000
767,000
1,203,000
1,033,000
$2,535,000
$2,355,000
$269,000
500,000
37,000
$237,000
500,000
58,000
Total current liabilities
Long-term liabilities:
Bonds payable, 20XY
806,000
795,000
150,000
100,000
Total liabilities
Shareholders’ equity:
956,000
895,000
Total assets
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
Notes payable
Accrued expenses
Preferred stock
Common stock
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
100,000
500,000
979,000
100,000
500,000
860,000
1,579,000
1,460,000
$2,535,000
$2,355,000
Prepare a statement of cash flows for the Maris Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)
MARIS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating Activities:
Net income
Add items not requiring an outlay of cash:
Amortization expense
Cash flow from operations
Increase in accounts receivable
Increase in inventory
Decrease in prepaid expenses
Increase in accounts payable
Decrease in accrued expenses
$ 309,000
230,000
539,000
-12,000
-24,000
32,000
32,000
-21,000
7,000
Net Change in non-cash working capital
Cash provided by
Investing activities:
Decrease in investments
Increase in plant and equipment
Cash used in
9,000
-400,000
-391,000
Investing activities
Financing activities:
Increase in bonds payable
Preferred stock dividends paid
Common stock dividends paid
Cash used in
546,000
operating activities
financing activities
Net increase in cash
50,000
-40,000
-150,000
-140,000
15,000
105,000
Cash, beginning of year
$ 120,000
Cash, end of year
References
Worksheet
Learning Objective: 02-04
Explain the importance of
cash flows as identified in
the statement of cash
flows.
Given is the Income Statement for the year ended December 31, 20XX, Statement of Retained Earnings for the year ended
December 31, 20XX and Comparative Balance Sheets for 20XW and 20XX of Maris Corporation:
Maris Corporation
Income Statement
Year Ended December 31, 20XX
Sales
Cost of goods sold
$4,100,000
2,475,000
Gross profits
Selling and administrative expense
Amortization expense
1,625,000
570,000
230,000
Operating income
Interest expense
825,000
46,000
Earnings before taxes
Taxes
779,000
470,000
Earnings after taxes
309,000
Preferred stock dividends
40,000
Earnings available to common shareholders
$269,000
Shares outstanding
Earnings per share
269,000
$1.00
Statement of Retained Earnings
For the Year Ended December 31, 20XX
Retained earnings, balance, January 1, 20XX
Add: Earnings available to common shareholders, 20XX
Deduct: Cash dividends declared and paid in 20XX
$860,000
269,000
150,000
Retained earnings, balance, December 31, 20XX
$979,000
Comparative Balance Sheets
For 20XX and 20XW
December 31, 20XX
Assets
Current assets:
Cash
Accounts receivable (net)
Inventory
Prepaid expenses
Total current assets
Investments (long-term securities)
Plant and equipment
Less: Accumulated depreciation
Net plant and equipment
December 31, 20XW
$120,000
570,000
510,000
32,000
$105,000
558,000
486,000
64,000
1,232,000
100,000
1,213,000
109,000
2,200,000
997,000
1,800,000
767,000
1,203,000
1,033,000
$2,535,000
$2,355,000
$269,000
500,000
37,000
$237,000
500,000
58,000
Total current liabilities
Long-term liabilities:
Bonds payable, 20XY
806,000
795,000
150,000
100,000
Total liabilities
Shareholders’ equity:
Preferred stock
Common stock
Retained earnings
956,000
895,000
100,000
500,000
979,000
100,000
500,000
860,000
1,579,000
1,460,000
$2,535,000
$2,355,000
Total assets
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable
Notes payable
Accrued expenses
Total shareholders’ equity
Total liabilities and shareholders’ equity
Prepare a statement of cash flows for the Maris Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)
MARIS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating Activities:
Net income
Add items not requiring an outlay of cash:
Amortization expense
$
230,000
539,000
Cash flow from operations
Increase in accounts receivable
Increase in inventory
Decrease in prepaid expenses
Increase in accounts payable
Decrease in accrued expenses
-12,000
-24,000
32,000
32,000
-21,000
7,000
Net Change in non-cash working capital
Cash provided by
Cash used in
546,000
operating activities
Investing activities:
Decrease in investments
Increase in plant and equipment
9,000
-400,000
-391,000
Investing activities
Financing activities:
Increase in bonds payable
Preferred stock dividends paid
Common stock dividends paid
Cash used in
50,000
-40,000
-150,000
-140,000
financing activities
15,000
Net increase in cash
105,000
Cash, beginning of year
Cash, end of year
Explanation:
No further explanation details are available for this problem.
309,000
$
120,000
2.
Award: 25 out of 25.00 points
The following information is provided for the Loofa Corporation.
Balance Sheets
December 31, 20XX
Assets
Cash
Accounts receivable
Inventory
Equipment
Less: Accumulated depreciation
December 31, 20XW
$57,345
43,690
114,685
101,035
24,575
Net equipment
Total assets
Liabilities and Equity
Accounts payable
Taxes payable
Common stock
Retained earnings
Total liabilities and equity
$21,845
49,150
98,300
81,920
16,385
76,460
65,535
$292,180
$234,830
$46,420
5,465
180,220
60,075
$27,305
10,920
163,835
32,770
$292,180
$234,830
During 20XX, the following occurred:
1. Net income was $54,610.
2. Equipment was purchased for cash, and no equipment was sold.
3. Shares were sold for cash.
4. Dividends were declared and paid.
a. Prepare a statement of cash flows for the Loofa Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)
Loofa Corporation
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating Activities:
Net income
Add items not requiring an outlay of cash:
Amortization expense
Cash flow from operations
Changes in non-cash working capital:
Decrease in accounts receivable
Increase in inventory
Increase in accounts payable
Decrease in taxes payable
$ 54,610
8,190
62,800
5,460
-16,385
19,115
-5,455
2,735
Net Change in non-cash working capital
Cash provided by
Investing activities:
Increase in equipment
Cash used in
-19,115
-19115
investing activities
Financing activities:
Issue of common stock
Common stock dividends paid
Cash used in
65,535
operating activities
financing activities
16,385
-27,305
-10,920
Net increase in cash
35,500
Cash, beginning of year
21,845
$ 57,345
Cash, end of year
b. Not available in Connect.
References
Worksheet
Learning Objective: 02-04
Explain the importance of
cash flows as identified in
the statement of cash
flows.
The following information is provided for the Loofa Corporation.
Balance Sheets
December 31, 20XX
Assets
Cash
Accounts receivable
Inventory
Equipment
Less: Accumulated depreciation
December 31, 20XW
$57,345
43,690
114,685
101,035
24,575
Net equipment
Total assets
Liabilities and Equity
Accounts payable
Taxes payable
Common stock
Retained earnings
Total liabilities and equity
$21,845
49,150
98,300
81,920
16,385
76,460
65,535
$292,180
$234,830
$46,420
5,465
180,220
60,075
$27,305
10,920
163,835
32,770
$292,180
$234,830
During 20XX, the following occurred:
1. Net income was $54,610.
2. Equipment was purchased for cash, and no equipment was sold.
3. Shares were sold for cash.
4. Dividends were declared and paid.
a. Prepare a statement of cash flows for the Loofa Corporation. (Amounts to be deducted should be indicated with a
minus sign. Omit $ sign in your response.)
Loofa Corporation
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating Activities:
Net income
Add items not requiring an outlay of cash:
Amortization expense
Cash flow from operations
Changes in non-cash working capital:
Decrease in accounts receivable
Increase in inventory
Increase in accounts payable
Decrease in taxes payable
Net Change in non-cash working capital
Cash provided by
operating activities
$
54,610
8,190
62,800
5,460
-16,385
19,115
-5,455
2,735
65,535
Investing activities:
Increase in equipment
Cash used in
-19115
investing activities
Financing activities:
Issue of common stock
Common stock dividends paid
Cash used in
-19,115
16,385
-27,305
-10,920
financing activities
Net increase in cash
35,500
Cash, beginning of year
21,845
Cash, end of year
b. Not available in Connect.
Explanation:
No further explanation details are available for this problem.
$
57,345
3.
Award: 25 out of 25.00 points
The following information is provided for the Waif Corporation.
Balance Sheets
December 31, 20XX
Assets
Cash
Accounts receivable
Inventory
Land
Plant and equipment
Less: Accumulated depreciation
December 31, 20XW
$54,500
64,800
142,200
60,000
206,000
55,000
Net plant and equipment
Total assets
Liabilities and Equity
Accounts payable
Bonds payable
Common stock
Retained earnings
Total liabilities and shareholders’ equity
$17,400
52,200
149,300
87,000
158,000
33,000
151,000
125,000
$472,500
$430,900
$27,000
118,000
170,000
157,500
37,000
158,000
130,000
105,900
$472,500
$430,900
During 20XX, the following occurred:
1. Net income was $91,000.
2. Bonds were retired by issuing new common stock.
3. No equipment was sold.
4. Cash dividends were paid.
a. Prepare a statement of cash flows for the Waif Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)
Waif Corporation
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating activities:
Net income
Add items not requiring an outlay of cash:
Amortization expense
Cash flow from operations
Changes in non-cash working capital:
Increase in accounts receivable
Decrease in inventory
Decrease in accounts payable
$ 91,000
22,000
113,000
-12,600
7,100
-10,000
-15,500
Net change in non-cash working capital
Cash provided by
Investing activities:
Increase in plant and equipment
Sale of land
Cash used in
97,500
operating activities
-48,000
27,000
-21,000
investing activities
Financing activities:
Retirement of bonds payable
-40,000
Issue of common stock
Common stock dividends paid
40,000
-39,400
Cash used in
financing activities
Net increase in cash
-39,400
37,100
17,400
Cash, beginning of year
$ 54,500
Cash, end of year
b. Not available in Connect.
References
Worksheet
Learning Objective: 02-04
Explain the importance of
cash flows as identified in
the statement of cash
flows.
The following information is provided for the Waif Corporation.
Balance Sheets
December 31, 20XX
Assets
Cash
Accounts receivable
Inventory
Land
Plant and equipment
Less: Accumulated depreciation
December 31, 20XW
$54,500
64,800
142,200
60,000
206,000
55,000
Net plant and equipment
Total assets
Liabilities and Equity
Accounts payable
Bonds payable
Common stock
Retained earnings
Total liabilities and shareholders’ equity
$17,400
52,200
149,300
87,000
158,000
33,000
151,000
125,000
$472,500
$430,900
$27,000
118,000
170,000
157,500
37,000
158,000
130,000
105,900
$472,500
$430,900
During 20XX, the following occurred:
1. Net income was $91,000.
2. Bonds were retired by issuing new common stock.
3. No equipment was sold.
4. Cash dividends were paid.
a. Prepare a statement of cash flows for the Waif Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)
Waif Corporation
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating activities:
Net income
Add items not requiring an outlay of cash:
Amortization expense
Cash flow from operations
Changes in non-cash working capital:
Increase in accounts receivable
Decrease in inventory
Decrease in accounts payable
$
91,000
22,000
113,000
-12,600
7,100
-10,000
Net change in non-cash working capital
Cash provided by
97,500
operating activities
Investing activities:
Increase in plant and equipment
Sale of land
Cash used in
-15,500
-48,000
27,000
-21,000
investing activities
Financing activities:
Retirement of bonds payable
-40,000
Issue of common stock
Common stock dividends paid
40,000
-39,400
Cash used in
-39,400
financing activities
Net increase in cash
37,100
Cash, beginning of year
17,400
Cash, end of year
b. Not available in Connect.
Explanation:
No further explanation details are available for this problem.
$
54,500
4.
Award: 25 out of 25.00 points
Coastal Pipeline Corp. anticipates cash flows from operating activities of $8 million in 20XX. It will need to spend $1.5 million on
capital investments in order to remain competitive within the industry. Common share dividends are projected at $0.6 million
and preferred dividends at $0.25 million.
a. What is the firm’s projected free cash flow for the year 20XX? (Enter the answer in millions. Round the final answer to 2
decimal places.)
Free cash flow
$ 5.65
million
References
Worksheet
Learning Objective: 02-04
Explain the importance of
cash flows as identified in
the statement of cash
flows.
Coastal Pipeline Corp. anticipates cash flows from operating activities of $8 million in 20XX. It will need to spend $1.5 million
on capital investments in order to remain competitive within the industry. Common share dividends are projected at $0.6 million
and preferred dividends at $0.25 million.
a. What is the firm’s projected free cash flow for the year 20XX? (Enter the answer in millions. Round the final answer to 2
decimal places.)
Free cash flow
$
5.65 million
Explanation:
Coastal Pipeline Corp.
Cash flow from operating activities
− Capital expenditures
− Common share dividends
− Preferred share dividends
$8.00 million
1.50
0.60
0.25
Free cash flow
$5.65 million