Question

Carter Corporation Income Stmt and Comparative Balance Sheet

Refer to the following financial statements for Crosby Corporation:   
  

CARTER CORPORATION Income Statement For the Year Ended December 31, 20X2
Sales		$	3,000,000
Cost of goods sold			2,544,000
Gross profit		$	456,000
Selling and administrative expense			90,000
Depreciation expense			100,000
Operating income		$	266,000
Interest expense			66,000
Earnings before taxes		$	200,000
Taxes			80,000
Earnings after taxes		$	120,000

  

  

Statement of Retained Earnings For the Year Ended December 31, 20X2
Retained earnings, balance, January 1, 20X2	$	730,000
Add: Earnings available to common stockholders, 20X2		120,000
Deduct: Cash dividends declared and paid in 20X2		100,000
Retained earnings, balance, December 31, 20X2	$	750,000

Comparative Balance Sheets For 20X2 and 20X1
	Year-End 20X2				Year-End 20X1
Assets
Current assets:
Cash		$	50,000			$	55,000
Accounts receivable (net)			350,000				315,000
Inventory			300,000				215,000
Prepaid expenses			0				25,000
Total current assets		$	700,000			$	610,000
Gross plant and equipment	$ 1,800,000				$ 1,470,000
Less: Accumulated depreciation	500,000				400,000
Net plant and equipment			1,300,000				1,070,000
Total assets		$	2,000,000			$	1,680,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	60,000			$	30,000
Notes payable			100,000				60,000
Accrued expenses			140,000				130,000
Total current liabilities		$	300,000			$	220,000
Long-term liabilities:
Bonds payable, 20X2			800,000				580,000
Total liabilities		$	1,100,000			$	800,000
Stockholders’ equity:
Preferred stock, $100 par value		$	0			$	0
Common stock, $1 par value			50,000				50,000
Capital paid in excess of par			100,000				100,000
Retained earnings			750,000				730,000
Total stockholders’ equity		$	900,000			$	880,000
Total liabilities and stockholders’ equity		$	2,000,000			$	1,680,000

CARTER CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 20X2
Cash flows from operating activities:		Totals
Net income		aNSWER
Adjustments to determine cashflow from operating activities:
Add back depreciation	ANSWER
___________ in accounts receivable	ANSWER
___________ in inventory	ANSWER
___________ in prepaid expenses	ANSWER
___________ in accounts payable	ANSWER
_____________notes payable	ANSWER
___________ in accrued expenses	ANSWER
Total adjustments	ANSWER
Net cash flows from operating activities		ANSWER
Cash flows from investing activities:
	ANSWER
______________ plant and equipment	ANSWER
Net cash flows from investing activities		ANSWER
Cash flows from financing activities:
__________ bonds payable	ANSWER
Preferred stock dividends paid	ANSWER
Common stock dividends paid	ANSWER
Net cash flows from financing activities		ANSWER
Net change in cash		ANSWER

Answer 1

	Statement of Cash Flows - Indirect Method
		Amount in $	Amount in $
	Net income		$          1,20,000
	Cash flows from operating activities
	Adjustments for:
	Depreciation	$          1,00,000
	(Increase) / Decrease in Account receivables	$            -35,000
	Inventory Decrease / (Increase)	$            -85,000
	Accounts payable Increase / ( Decrese)	$             30,000
	Prepaid Expenses	$             25,000
	Accrued Expenses	$             10,000
			$             45,000
	Net cash from operating activities		$          1,65,000
	Cash flows from investing activities
	Purchase of Plant and Equipment	$        -3,30,000
	Net cash used in investing activities		$        -3,30,000
	Cash flows from Financing activities
	Issue of Long Term Notes Payable	$          2,20,000
	Issue of notes Payable	$             40,000
	Dividend Paid	$        -1,00,000
	Net cash used in financing activities		$          1,60,000
	Net increase in cash and cash equivalents		$              -5,000
	Add :Cash and cash equivalents at beginning of period		$             55,000
	Cash and cash equivalents at end of period		$             50,000