Problem: The balance sheet and income statement for XYZ company are presented along with some additional information about the accounts.
Answer the following questions concerning cash flows for the period.
All accounts receivable and accounts payable are related to trade merchandise. Accounts pyable are recorded net and always are paid to take all the discounts allowed.
The allowance for doubtful accounts at the end of 2008 was the same as at the end of 2007; no receivables were charged against the allowance during 2008.
The proceeds from the note payable were used to finance a new store building. Capital stock was sold to provide additional working capital.
Required to do:
1. Calculate cash collected during 2008 from accounts receivable
2. Calculate cash payments during 2008 on accounts payable to suppliers
3. Calculate cash provided from operations for 2008
4. Calculate cash inflows during 2008 from financing activities
5. Calculate cash outflows from investing activities during 2008
| BALANCE SHEET |
DECEMBER. 31 |
|
2008 |
|
2007 |
| Assets |
|
|
|
| Current assets |
|
|
|
| Cash |
300000 |
|
200000 |
| Accounts receivable - net |
840000 |
|
580000 |
| Merchandise inventory |
660000 |
|
420000 |
| Prepaid expenses |
100000 |
|
50000 |
| Total current assets |
1900000 |
|
1250000 |
|
|
|
|
| Long term investments |
80000 |
|
0 |
|
|
|
|
| Land, building, and fixtures |
1130000 |
|
600000 |
| Less: Accumulated depreciation |
-110000 |
|
-50000 |
|
1020000 |
|
550000 |
| Total assets |
3000000 |
|
1800000 |
|
|
|
|
| Liabilities and Stockholders' Equity |
|
|
|
| Current lliabilities |
|
|
|
| Accounts payable |
530000 |
|
440000 |
| Accrued expenses |
140000 |
|
130000 |
| Dividends payable |
70000 |
|
0 |
| Total current liabilities |
740000 |
|
570000 |
| Note payable - due year 2011 |
500000 |
|
0 |
|
|
|
|
| Stockholders' equity |
|
|
|
| Common stock |
1200000 |
|
900000 |
| Retained earnings |
560000 |
|
330000 |
| Total stockholders' equity |
1760000 |
|
1230000 |
| Total liabilities and stockholders' equity |
3000000 |
|
1800000 |
|
YEARS ENDED DECEMBER. 31 |
| INCOME STATEMENT |
2008 |
|
2007 |
|
|
|
|
| Net credit sales |
6400000 |
|
4000000 |
| Cost of goods sold |
5000000 |
|
3200000 |
| Gross profit |
1400000 |
|
800000 |
| Expenses (including income taxes) |
1000000 |
|
520000 |
| Net income |
400000 |
|
280000 |