Question

Case 11–2 Amerbran Company (A)* Amerbran Company was a diversified company that sold various consumer products, including food, tobacco, distilled products, and personal care products and financial services. Financial statements for the company are shown in Exhibit EXHIBIT 1 AMERBRAN COMPANY Balance Sheets As of December 31, 20x1 and 20x0 (in thousands) 20x1 20x0 Assets Cash $ 28,912 $ 23,952 Accounts receivable 756,152 687,325 Inventories 1,244,912 1,225,402 Prepaid expenses ____7_6_,_1_4_0_ ____7_7_,_1_6_7_ Total current assets 2,106,116 2,013,846 Investments _1_,_1_1_6_,_5_3_4_ _1_,_0_5_8_,_6_3_7_ Property, plant, and equipment, at cost 1,566,268 1,366,719 Less accumulated depreciation ___7_2_3_,_4_4_2_ ___6_4_5_,_7_3_4_ Net property, plant, and equipment 842,826 720,985 Goodwill 645,210 577,606 Other assets ___1_1_5_,_8_2_6_ ____6_2_,_3_7_4_ Total assets $__4__,__8__2__6__,__5__1__2__ $__4__,__4__3__3__,__4__4__8__ Liabilities and Shareholders’ Equity Accounts payable $ 271,452 $ 238,377 Short-term debt 430,776 351,112 Accrued expenses payable ___9_2_2_,_9_9_0_ ___7_2_8_,_2_6_2_ Total current liabilities 1,625,218 1,317,751 Long-term liabilities ___8_8_0_,_6_7_4_ ___9_3_2_,_8_2_8_ Total liabilities _2_,_5_0_5_,_8_9_2_ _2_,_2_5_0_,_5_7_9_ Convertible preferred stock 33,828 42,611 Common stock, at par 322,834 161,417 Additional paid-in capital 53,641 57,072 Treasury stock, at cost (110,948) (102,705) Retained earnings _2_,_0_2_1_,_2_6_5_ _2_,_0_2_4_,_4_7_4_ Total shareholders’ equity _2_,_3_2_0_,_6_2_0_ _2_,_1_8_2_,_8_6_9_ Total liabilities and shareholders’ equity $__4__,__8__2__6__,__5__1__2__ $__4__,__4__3__3__,__4__4__8__ Income Statement For the year ended December 31, 20x1 (in thousands) Sales revenues, net $__7_,_6_2_2_,_6_7_7_ Cost of sales 2,803,623 Excise taxes on goods sold __2_,_8_8_7_,_6_1_6_ Gross margin 1,931,438 Selling, general, and administrative expenses __1_,_3_2_8_,_1_0_7_ Income before income taxes 603,331 Provision for income taxes ____2_7_4_,_5_5_8_ Net income $____3_2_8_,_7_7_3_ The 20x1 financial statements reflect the following transactions (dollar amounts are in thousands): 1. Depreciation and amortization expense was $115,974. 2. Net income included a loss of $66,046 resulting from the write-off of some obsolete equipment. The equipment had not yet been disposed of. 3. Net income included $59,610 from Amerbran’s investment in a subsidiary; none of this income had been received in cash. 4. The year-end balance in Deferred Income Taxes was $17,548 lower than it was at the start of the year. 5. New property, plant, and equipment purchases totaled $260,075, all paid for with cash. Disposals of fixed assets generated $33,162 cash proceeds. 6. Acquisition of another company that was made for cash resulted in additional depreciable assets of $31,691 and goodwill of $102,030. 7. Cash dividends were paid in the amount of $216,158. 8. The firmdeclared and issued a 100 percent common stock dividend effective September 10, 20x1; that is, each shareholder received as a dividend a number of shares equal to his or her holdings prior to the dividend. The newly issued shares were valued at par in recording this transaction. 9. The firm spent $30,609 to purchase treasury stock on the open market. Some of the shares so acquired were reissued to certain employees as a bonus. 10. The firm increased its short-term debt as indicated on the balance sheet in Exhibit 1. Long-term borrowings decreased by $34,606. Question Prepare a statement of cash flows for the year 20x1. In order for your statement to show the correct increase in cash ($4,960), you will need to add a “miscellaneous activities” category; this will capture several transactions that were not described because they are more complicated than those covered in the text.

Answer 1

Particulars	20X0	20X1
Assets
Current Assets:
Cash	23,952	28,912
Account Receivable	687,325	756,152
Inventories	1,225,402	1,244,912
Prepaid Expenses	77,167	76,140
Total Current Assets	2,013,846	2,106,116
Non Current Assets:
Investments	1,058,637	1,116,534
Property, Plant and Equipmenmt, At Cost	1,366,719	1,566,268
Less Accumulated Depriciation	(645,734)	(723,442)
Net Property, Plan and Equipment	720,985	842,826
Goodwill	577,606	645,210
Other Assets	62,374	115,826
Total Non Current Assets	2,419,602	2,720,396
Total Assets	4,433,448	4,826,512
Liabilities & Shareholder's Equity
Current Liabilities:
Accounts Payable	238,377	271,452
Short-Term Debt	351,112	430,776
Total Current liabilities	1,317,751	1,625,218
Long Term Liabilities	932828	880674
Total Liabilities	2250579	2505892
Convertable Prefferd Stock	42611	33828
Common Stock at par	161417	322834
Additional paid in capital	57072	53641
Treasury stock at par	(102705)	(110948)
Retained earnings	2024474	2021265
Total Shareholder's equity	2182869	2320620
Total Liability & shareholder's equity	4433448	4826512

AMERBRAN COMPANY

Cash Flow Statement

For the year ended 31 December 20X1

Net Cash flow from oprating activities
Net Income	328773
Non cash item including in income	115974
Defferd Taxes	(17548)
Increase in Accounts Receivable	(68827)
Increase In Inventories	(19510)
Decrease in prepaid expenses	1027
Increase in Accounts Payable	33075
Increase In Accrude Expenses Payable	194728
Writte Off of obsolete Equipments	66046
Income from subsidiaries	(59610)
Cash Flow From Operating activities	574128
Cash flow From Investing Activities:
Acquisition of plant, property and equipments	(260075)
Proceeds from disposals	31162
Acquisition of other company	(133721)
Net cash used by investing activities	(360634)
Cash flow from financing activities:
Proceeds of short term debts	79664
Payment on long term debts	(34606)
Dividends paid	(216158)
Purchase of Treasury stocks	(30609)
Net cash used by financing activity	(201709)
Cash Increase From Cash Flow Statement	11785
Cash Flow From Miscellaneous	(6825)
Net Cash Increase	4960
Cash at begning of year	23952
Cash at end of year	28912