Cardinal Industries had the following operating results for 2018: Sales = $33,51
ID: 2815552 • Letter: C
Question
Cardinal Industries had the following operating results for 2018: Sales = $33,510; Cost of goods sold = $23,820; Depreciation expense = $5,917; Interest expense = $2,670; Dividends paid = $1,924. At the beginning of the year, net fixed assets were $19,860, current assets were $6,998, and current liabilities were $3,944. At the end of the year, net fixed assets were $24,430, current assets were $8,636, and current liabilities were $4,601. The tax rate for 2018 was 24 percent.
Cardinal Industries had the following operating results for 2018: Sales = $33,510; Cost of goods sold = $23,820; Depreciation expense = $5,917; Interest expense = $2,670; Dividends paid = $1,924. At the beginning of the year, net fixed assets were $19,860, current assets were $6,998, and current liabilities were $3,944. At the end of the year, net fixed assets were $24,430, current assets were $8,636, and current liabilities were $4,601. The tax rate for 2018 was 24 percent.
Explanation / Answer
Answer a Calculation of net income for 2018 Sales $33,510.00 Less : Cost of goods sold $23,820.00 Gross Margin $9,690.00 Less : Depreciation Expense $5,917.00 Net Operating Income $3,773.00 Less : Interest Expense $2,670.00 Profit before tax $1,103.00 Less : Tax @ 24% $264.72 Net Income $838.28 Answer b Operating cash flow for 2018 Net Income $838.28 Add : Depreciation $5,917.00 Operating cash flow for 2018 $6,755.28 Answer c Cash flow from assets = Operating cash flow + Change in working capital + Change in fixed assets Change in working capital Beginning End Change Current assets $6,998.00 $8,636.00 Less : Current Liabilities $3,944.00 $4,601.00 Working Capital $3,054.00 $4,035.00 -$981.00 Change in fixed assets Beginning End Change Net Fixed assets $19,860.00 $24,430.00 Add : Depreciation $5,917.00 Net Fixed assets $19,860.00 $30,347.00 -$10,487.00 Cash flow from assets = $6755.28 - $981 - $10487 = -$4,712.72 Answer d Cash flow creditors = Current liabilities at the end - Current liabilities at the beginning Cash flow creditors = $4601 - $3944 = $657 Answer e Balance sheet Beginning End Net Fixed Assets $19,860.00 $24,430.00 Current assets $6,998.00 $8,636.00 Total Assets $26,858.00 $33,066.00 less : Current liabilities $3,944.00 $4,601.00 Equity Plus debt $22,914.00 $28,465.00 Calculation of issue of common stock Equity plus debt at the end $28,465.00 Less : Net Income $838.28 Add : Dividend paid $1,924.00 Less : Equity plus debt at the beginning $22,914.00 Issue of common stock $6,636.72 Cash flow to stockholders = Dividend paid + Issue of common stock = -$1924 + $6636.72 = $4,712.72