Help with Crosby Corporation?
Can you please help me. I am completly stuck.
Prepare a statement of cash flows for the Crosby Corporation. Follow the general
procedures indicated in Table 2–10 on page 38 .
Statement of cash
flows
(L04)
Current Assets Liabilities
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $ 15,000 Accounts payable . . . . . . . . $ 20,000
Accounts receivable . . . . . . . . . . . . . 22,500 Notes payable . . . . . . . . . . . 30,000
Inventory . . . . . . . . . . . . . . . . . . . . . . 37,500 Bonds payable . . . . . . . . . . . 75,000
Prepaid expenses . . . . . . . . . . . . . . . 18,000
Fixed Assets Stockholders’ Equity
Plant and equipment (gross) . . . . . . . $375,000 Common stock . . . . . . . . . . $112,500
Paid-in capital . . . . . . . . . . . 37,500
Less: Accumulated depreciation . . . . 75,000 Retained earnings . . . . . . . . 118,000
Net plant and assets . . . . . . . . . . . . . 300,000 Total liabilities and
Total assets . . . . . . . . . . . . . . . . . . . . $393,000 stockholders’ equity . . . . . $393,000
continued
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
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
To prepare a statement of cash flows for the Crosby Corporation, you will need to follow the general procedures indicated in Table 2-10 on page 38. Here are the steps you can follow:
1. Determine the net increase or decrease in cash and cash equivalents during the year. This can be calculated as the difference between the cash balance at the end of the year and the cash balance at the beginning of the year.
Net increase/decrease in cash = Cash balance at year-end - Cash balance at year-start
2. Identify the cash inflows and outflows from operating activities. This includes cash received from customers for sales, cash paid to suppliers and employees for expenses, and any other cash flows directly related to the company's core operations.
3. Identify the cash inflows and outflows from investing activities. This includes cash flows related to the purchase and sale of long-term assets, such as property, plant, and equipment, as well as any investments in other companies.
4. Identify the cash inflows and outflows from financing activities. This includes cash received or paid for issuing or repurchasing stock, borrowing or repaying loans, and paying dividends to shareholders.
5. Prepare the statement of cash flows by categorizing the cash inflows and outflows identified in steps 2, 3, and 4 into three sections: operating activities, investing activities, and financing activities.
The statement of cash flows should have the following format:
Crosby Corporation
Statement of Cash Flows
For the Year Ended December 31, 2008
Operating Activities:
Net Income
Adjustments for non-cash items (such as depreciation)
Changes in working capital (accounts receivable, accounts payable, etc.)
Net Cash Provided by Operating Activities
Investing Activities:
Cash inflows from sales of investments or fixed assets
Cash outflows for purchases of investments or fixed assets
Net Cash Provided by (Used for) Investing Activities
Financing Activities:
Cash inflows from issuing stock or borrowing
Cash outflows for repurchasing stock, repaying loans, or paying dividends
Net Cash Provided by (Used for) Financing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Beginning Cash Balance
Ending Cash Balance