10.00 points
Identify how each of the following separate transactions affectsfinancial statements. For the balance sheet, identify how eachtransaction affects total assets, total liabilities, and totalequity. For the income statement, identify how each transactionaffects net income. For the statement of cash flows, identify howeach transaction affects cash flows from operating activities, cashflows from financing activities, and cash flows from investingactivities. For increases, select "+" in the column or columns. Fordecreases, select "%u2013" in the column or columns. If both anincrease and a decrease occur, place a "+/-" in the column orcolumns. The first transaction is completed as an example.(Leave no cells blank- be certain to select "0" wherever required.)
Identify how each of the following separate transactions affectsfinancial statements. For the balance sheet, identify how eachtransaction affects total assets, total liabilities, and totalequity. For the income statement, identify how each transactionaffects net income. For the statement of cash flows, identify howeach transaction affects cash flows from operating activities, cashflows from financing activities, and cash flows from investingactivities. For increases, select "+" in the column or columns. Fordecreases, select "%u2013" in the column or columns. If both anincrease and a decrease occur, place a "+/-" in the column orcolumns. The first transaction is completed as an example.(Leave no cells blank- be certain to select "0" wherever required.) | |
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Related questions
Statement of Cash Flows Using a Work SheetâIndirect Method (Appendix)
Peoria Corp. just completed another successful year, as indicated by the following income statement:
| For the Year Ended December 31, 2017 | |
| Sales revenue | $1,250,000 |
| Cost of goods sold | 700,000 |
| Gross profit | $550,000 |
| Operating expenses | 150,000 |
| Income before interest and taxes | $400,000 |
| Interest expense | 25,000 |
| Income before taxes | $375,000 |
| Income tax expense | 150,000 |
| Net income | $225,000 |
Presented here are comparative balance sheets:
| December 31 | |||
| 2017 | 2016 | ||
| Cash | $52,000 | $90,000 | |
| Accounts receivable | 180,000 | 130,000 | |
| Inventory | 230,000 | 200,000 | |
| Prepayments | 15,000 | 25,000 | |
| Total current assets | $477,000 | $445,000 | |
| Land | $750,000 | $600,000 | |
| Plant and equipment | 700,000 | 500,000 | |
| Accumulated depreciation | (250,000) | (200,000) | |
| Total long-term assets | $1,200,000 | $900,000 | |
| Total assets | $1,677,000 | $1,345,000 | |
| Accounts payable | $130,000 | $148,000 | |
| Other accrued liabilities | 68,000 | 63,000 | |
| Income taxes payable | 90,000 | 110,000 | |
| Total current liabilities | $288,000 | $321,000 | |
| Long-term bank loan payable | $350,000 | $300,000 | |
| Common stock | $550,000 | $400,000 | |
| Retained earnings | 489,000 | 324,000 | |
| Total stockholders' equity | $1,039,000 | $724,000 | |
| Total liabilities and stockholders' equity | $1,677,000 | $1,345,000 | |
Other information is as follows:
Dividends of $60,000 were declared and paid during the year.
Operating expenses include $50,000 of depreciation.
Land and plant and equipment were acquired for cash, and additional stock was issued for cash. Cash also was received from additional bank loans.
The president has asked you some questions about the year's results. She is very impressed with the profit margin of 18% (net income divided by sales revenue). She is bothered, however, by the decline in the company's cash balance during the year. One of the conditions of the existing bank loan is that the company maintain a minimum cash balance of $50,000.
Required:
1. Using the format in the chapter's appendix, prepare a statement of cash flows work sheet. If an amount box does not require an entry, leave it blank. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash.
| Balances | Cash Inflows (Outflows) | |||||
| Accounts | 12/31/17 | 12/31/16 | Changes | Operating | Investing | Financing |
| Cash | $ | $ | $ | $ | $ | $ |
| Accounts Receivable | ||||||
| Inventory | ||||||
| Prepayments | ||||||
| Land | ||||||
| Plant and Equipment | ||||||
| Accumulated Depreciation | ||||||
| Accounts Payable | ||||||
| Other Accrued Liabilities | ||||||
| Income Taxes Payable | ||||||
| Long-Term Bank Loan Payable | ||||||
| Common Stock | ||||||
| Retained Earnings | ||||||
| Net Income | ||||||
| Totals | $ | $ | $ | $ | $ | $ |
| Net increase (decrease) in cash | $ | |||||
2. Prepare a statement of cash flows for 2017 using the indirect method in the Operating Activities section. Use the minus sign to indicate cash payments, cash outflows, or decreases in cash.
| Peoria Corp. | |
| Statement of Cash Flows | |
| For the Year Ended December 31, 2017 | |
| Cash Flows from Operating Activities | |
| $ | |
| Adjustments to reconcile net income to net cash provided by operating activities: | |
| $ | |
| Cash Flows from Investing Activities | |
| $ | |
| $ | |
| Cash Flows from Financing Activities | |
| $ | |
| $ | |
| $ | |
| Cash balance, December 31, 2016 | |
| Cash balance, December 31, 2017 | $ |
3. During the year Peoria experienced a decrease in cash at the end of the year due to
Use the balance sheet and income statement below: |
| VALIUMâS MEDICAL SUPPLY CORPORATION Balance Sheet as of December 31, 2015 and 2014 (in thousands of dollars) | ||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||
| Assets | Liabilitiesand Equity | |||||||||||||
| Current assets: | Currentliabilities: | |||||||||||||
| Cash and marketablesecurities | $ | 84 | $ | 83 | Accrued wages and taxes | $ | 65 | $ | 53 | |||||
| Accounts receivable | 198 | 193 | Accounts payable | 164 | 153 | |||||||||
| Inventory | 326 | 303 | Notes payable | 143 | 143 | |||||||||
| Total | $ | 608 | $ | 579 | Total | $ | 372 | $ | 349 | |||||
| Fixed assets: | Long-term debt: | $ | 617 | $ | 580 | |||||||||
| Gross plant and equipment | $ | 1,109 | $ | 906 | Stockholdersâequity: | |||||||||
| Less: Depreciation | 170 | 125 | Preferred stock (6 thousandshares) | $ | 6 | $ | 6 | |||||||
| Common stock and paid-insurplus | 120 | 120 | ||||||||||||
| Net plant and equipment | $ | 939 | $ | 781 | (100thousand shares) | |||||||||
| Other long-term assets | 158 | 158 | Retainedearnings | 590 | 463 | |||||||||
| Total | $ | 1,097 | $ | 939 | Total | $ | 716 | $ | 589 | |||||
| Total assets | $ | 1,705 | $ | 1,518 | Total liabilitiesand equity | $ | 1,705 | $ | 1,518 | |||||
| VALIUMâS MEDICAL SUPPLY CORPORATION Income Statement for Years Ending December 31, 2015 and 2014 (in thousands of dollars) | |||||||
| 2015 | 2014 | ||||||
| Net sales | $ | 916 | $ | 826 | |||
| Less: Cost of goodssold | 401 | 364 | |||||
| Gross profits | $ | 515 | $ | 462 | |||
| Less: Otheroperating expenses | 59 | 53 | |||||
| Earnings beforeinterest, taxes, depreciation, and amortization (EBITDA) | $ | 456 | $ | 409 | |||
| Less:Depreciation | 45 | 43 | |||||
| Earnings beforeinterest and taxes (EBIT) | $ | 411 | $ | 366 | |||
| Less: Interest | 60 | 54 | |||||
| Earnings beforetaxes (EBT) | $ | 351 | $ | 312 | |||
| Less: Taxes | 143 | 123 | |||||
| Net income | $ | 208 | $ | 189 | |||
| Less: Preferredstock dividends | $ | 6 | $ | 6 | |||
| Net income availableto common stockholders | $ | 202 | $ | 183 | |||
| Less: Common stockdividends | 75 | 75 | |||||
| Addition to retainedearnings | $ | 127 | $ | 108 | |||
| Per (common) sharedata: | |||||||
| Earnings per share (EPS) | $ | 2.02 | $ | 2 | |||
| Dividends per share (DPS) | $ | 0.75 | $ | 0.75 | |||
| Book value per share (BVPS) | $ | 7.10 | $ | 5.83 | |||
| Market value (price) per share(MVPS) | $ | 8.13 | $ | 6.31 | |||
Prepare a statement of cash flows for Valiumâs Medical SupplyCorporation. (Enter your answers in thousands. Amounts tobe deducted should be indicated with a minus sign. Leave no cellsblank - be certain to enter "0" wherever required.) |
| Statement of Cash Flows for Year Ending December 31, 2015 (in thousands of dollars) | |
| A. Cashflows from operating activities | |
| (Click toselect)Net lossNet income | $ |
| Additions (sourcesof cash): | |
| (Clickto select)Increase in fixed assetsIncrease in accountspayableDepreciationIncrease in other long-term assetsIncrease inaccrued wages and taxes | |
| (Clickto select)Increase in accrued wages and taxesDepreciationIncreasein fixed assetsIncrease in other long-term assetsIncrease inaccounts payable | |
| (Clickto select)DepreciationIncrease in accrued wages and taxesIncreasein other long-term assetsIncrease in fixed assetsIncrease inaccounts payable | |
| Subtractions (usesof cash): | |
| (Clickto select)Increase in accounts receivableIncrease ininventoryIncrease in common and preferred stockIncrease in notespayableIncrease in other long-term assets | |
| (Clickto select)Increase in common and preferred stockIncrease in otherlong-term assetsIncrease in inventoryIncrease in accountsreceivableIncrease in notes payable | |
| Net cash flow fromoperating activities | $ |
| B. Cashflows from investing activities | |
| Subtractions: | |
| (Clickto select)Increase in notes payableIncrease in accrued wages andtaxesIncrease in fixed assetsIncrease in other long-termassetsIncrease in long-term debt | $ |
| (Clickto select)Increase in long-term debtIncrease in notespayableIncrease in other long-term assetsIncrease in fixedassetsIncrease in accrued wages and taxes | |
| Net cash flow frominvesting activities | $ |
| C. Cashflows from financing activities | |
| Additions: | |
| (Clickto select)Increase in accounts payableIncrease in inventoryIncreasein long-term debtIncrease in notes payableIncrease in common andpreferred stock | $ |
| (Clickto select)Increase in long-term debtIncrease in inventoryIncreasein notes payableIncrease in accounts payableIncrease in common andpreferred stock | |
| (Clickto select)Increase in notes payableIncrease in long-termdebtIncrease in accounts payableIncrease in common and preferredstockIncrease in inventory | |
| Subtractions: | |
| (Clickto select)Common stock dividendsPreferred stock dividendsIncreasein other long-term assetsIncrease in accounts payableIncrease ininventory | |
| (Clickto select)Increase in accounts payableCommon stockdividendsIncrease in inventoryIncrease in other long-termassetsPreferred stock dividends | |
| Net cash flow fromfinancing activities | $ |
| D. Netchange in cash and marketable securities | $ |
| You have the following information on Elsâ Putters, Inc.: sales toworking capital is 4.7 times, profit margin is 25 percent, netincome available to common stockholders is $6.50 million, andcurrent liabilities are $6.1 million. What is the firmâs balance of current assets? (Enter your answer inmillions of dollars rounded to 2 decimal places.) | |
