Cash Flows and Financial Statements at Sunset Boards

Only available on StudyMode
  • Download(s) : 1713
  • Published : November 20, 2012
Open Document
Text Preview
CASH FLOWS AND FINANCIAL STATEMENTS AT SUNSET BOARDS

Below are the financial statements that you are asked to prepare.

1.The income statement for each year will look like this:

| Income statement|
| | 2008| | 2009|
 | Sales| $247,259| | $301,392|
 | Cost of goods sold| 126,038| | 159,143|
 | Selling & administrative| 24,787| | 32,352|
 | Depreciation| 35,581| | 40,217|
 | EBIT| $60,853| | $69,680|
 | Interest| 7,735| | 8,866|
 | EBT| $53,118| | $60,814|
 | Taxes| 10,624| | 12,163|
 | Net income| $42,494| | $48,651|

 | Dividends| $21,247| | $24,326|
 | Addition to retained earnings| 21,247| | 24,326|

2.The balance sheet for each year will be:

 | Balance sheet as of Dec. 31, 2008|
 | Cash| $18,187|  |  | Accounts payable | $32,143|  | Accounts receivable| 12,887|  |  | Notes payable | 14,651|  | Inventory| 27,119|  |  | Current liabilities | $46,794|  | Current assets| $58,193|  |  |  | |

 |  | |  |  | Long-term debt | $79,235|
 | Net fixed assets| $156,975|  |  | Owners' equity | 89,139|  | Total assets| $215,168|  |  | Total liab. & equity | $215,168|

In the first year, equity is not given. Therefore, we must calculate equity as a plug variable. Since total liabilities & equity is equal to total assets, equity can be calculated as:

Equity = $215,168 – 46,794 – 79,235
Equity = $89,139

 | Balance sheet as of Dec. 31, 2009|
 | Cash| $27,478|  |  | Accounts payable | $36,404|  | Accounts receivable| 16,717|  |  | Notes payable | 15,997|  | Inventory| 37,216|  |  | Current liabilities | $52,401|  | Current assets| $81,411|  |  |  | |

 |  | |  |  | Long-term debt | $91,195|
 | Net fixed assets| $191,250|  |  | Owners' equity | 129,065|  | Total assets| $272,661|  |  | Total liab. & equity | $272,661|...
tracking img