Show All Work Use the below information to answer the following questions: 2007
ID: 2640747 • Letter: S
Question
Show All Work
Use the below information to answer the following questions:
2007
2008
Sales
$
2870
$
3080
Depreciation
413
413
Cost of goods sold
987
1
121
Other Expenses
2
38
196
Interest
192
221
Cash
1505
1539
Accounts Receivables
1992
2244
Short
-
term Notes
Payable
291
273
Long
-
term debt
5040
5880
Net fixed assets
12,621
12,922
Accounts Payable
1581
1533
Tax rate
34%
34%
Inventory
3542
3640
*Payout ratio
52%
52%
*Dividends = payout ratio
x net income
A.
Create the Income Statements
for
2007 and
2008 (including dividends paid and
retained earnings).
B.
Create the Balance Sheets for 2007 & 2008.
C. Create the statement of Cash Flows for 2008.
D.
What is the CFFA for 2008
Explanation / Answer
A. Income Statement 2007
Sales $2870
COGS ($987)
Depreciation ($413)
Gross Profit $1470
Other Expenses ($238)
Operating Income $1232
Interest Expense ($192)
Pretax Income $1040
Income Tax Expense ($353.60) [income tax exp. = pretax income X 34% (tax rate)]
Net Income $686.40
Retained Earnings Beg. Bal. $12746.60
Net Income $686.40
Dividends ($356.93) (Net Income * 52%)
Retained Earnings End. Bal. $13076.07
Income Statement 2008
Sales $3080
COGS ($1121)
Depreciation ($413)
Gross Profit $1546
Other Expenses ($196)
Operating Income $1350
Interest Expense ($221)
Pretax Income $1129
Income Tax Expense ($383.86) [income tax exp. = pretax income X 34% (tax rate)]
Net Income $745.14
Retained Earnings Beg. Bal. $13076.07
Net Income $745.14
Dividends ($387.47) (Net income * 52%)
Retained Earnings End. Bal. $13433.74
Cash $1539
Accounts Receivable $2244
Inventory $3640
Net Fixed Assets $12922
Total Assets $20345
Accounts Payable $1581
Short Term Notes Payable $291
Long Term Debt $5040
Total Liabilities $6912
STOCKHOLDERS' EQUITY
Retained Earnings $13076.07 (Solved for based on Total SE - Div = Ret Earn)
Dividends 356.93
Total Stockholders' Equity $13433 (Solved for based on A - L = SE)
Balance Sheet 2008
Cash $1505
Accounts Receivable $1992
Inventory $3542
Net Fixed Assets $12,621
Total Assets $19660
Accounts Payable $1533
Short Term Notes Payable $273
Long Term Debt $5880
Total Liabilities $7686
STOCKHOLDERS' EQUITY
Retained Earnings $11586.53 (Solved for based on Total SE - Div = Ret Earn)
Dividends $387.47
Total Stockholders' Equity $11974 (Solved for based on A - L = SE)
Cash (Beg. Bal.) $1539
Cash Flow from Operating Activities Net Income $745.14
Depreciation $413
Accounts Receivable ($252) [subtract rise in accounts receivable from '07 to '08]
Accounts Payable ($48) [subtract rise in accounts receivable from '07 to '08]
Total Cash Flow from Operating Activities $858.14
Investing Cash Flow Net Fixed Assets ($301)
Cash Flow from Financing Activities
Dividends ($387.47)
Cash (End. Bal.) $1708.67
D. CFFA for 2008 = $858.14 - 301 - 387.47 = $169.67