Fin200 Week1 Cash Flow

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27. Prepare a statement of cash flows for the Crosby Corporation. Follow the general procedures indicated in Table 2–10 on page 38.

Crosby Corporation
Statement of cash flows
For the year ending December 31, 2008.

Cash flows from operating activities
Net income (earnings after taxes) = $160,000
Adjustments to determine cash flow from operating activities: Add back depreciation = $150,000
Increase in accounts receivable = ($50,000)
Increase in inventory = ($20,000)
Decrease in prepaid expenses = $20,000
Increase in accounts payable = $190,000
Decrease in accrued expenses = ($20,000)
Total adjustments: $270,000
Net cash flows from operating activities = $430,000

Cash flows from investing activities
Decreased in investments (long-term securities) = ($10,000)
Increase in plant and equipment = ($400,000)
Net cash flows from investing activities = ($390,000)

Cash Flows from financial activities
Increase in bonds payable = $50,000
Preferred stock dividends paid = (10,000)
Common stock dividends paid = (50,000)
Net cash flows from financing activities = ($10,000)

Net increase (decrease) in cash flows = $ 30,000

28. Describe the general relationship between net income and net cash flows from operating activities for the firm.

The relationship between the net income and net cash flows from operating activities for firm is what is left from all the expenses taken and add to come up with the total operating activities. The net income is what the company has started out before and then they determines what they need and increased in payments. Then what the cash flow from operating activities consist is the outcome of all of these expenses.

29. Has the buildup in plant and equipment been financed in a satisfactory manner? Briefly discuss.

I think the buildup in the expense with the plant and equipment has equal out with the payments. The company has invested in these activities to increase their profits. The more that they...
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