Fin/200 Cash Flow Preparation

Topics: Generally Accepted Accounting Principles, Balance sheet, Liability Pages: 2 (393 words) Published: March 31, 2012
Cash Flow Preparation
September 8, 2011
Axia College of University of Phoenix

1. Prepare a statement of cash flows for the Widget Corporation. Follow the general procedures indicated in Table 2–10.
___________________________________________________________________ WIDGET CORPORATION
Income Statement
For the Year Ended December 31, 2008
Cost of goods sold 1,300,000
Gross profits900,000
Selling and administrative expense420,000
Depreciation expense 150,000
Operating income330,000
Interest expense 90,000
Earnings before taxes240,000
Taxes 80,000
Earnings after taxes160,000
Preferred stock dividends 10,000
Earnings available to common stockholders$ 150,000
Shares outstanding120,000
Earnings per share$ 1.25
Statement of Retained Earnings
For the Year Ended December 31, 2008
Retained earnings, balance, January 1, 2008$500,000
Add: Earnings available to common stockholders, 2008150,000
Deduct: Cash dividends declared and paid in 200850,000
Retained earnings, balance, December 31, 2008$600,000
Comparative Balance Sheets
For 2007 and 2008
Current assets:
Cash$ 70,000$100,000
Accounts receivable (net)300,000350,000
Prepaid expenses 50,000 30,000
Total current assets830,000910,000
Investments (long-term securities)80,00070,000
Plant and equipment2,000,0002,400,000
Less: Accumulated depreciation 1,000,000 1,150,000
Net plant and equipment 1,000,000 1,250,000
Total assets$1,910,000$2,230,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$ 250,000$ 440,000
Notes payable400,000400,000
Accrued expenses 70,000 50,000
Total current liabilities720,000890,000
Long-term liabilities:
Bonds payable, 2008 70,000...
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