Question

T. P. Jarmon Company Balance Sheet for 12/31/2017 and 12/31/2018
Assets
	2017		2018
Cash	$15,000		$14,000
Marketable securities	6,000		6,200
Accounts receivable	42,000		33,000
Inventory	51,000		84,000
Prepaid rent	1,200		1,100
Total current assets	$115,200		$138,300
Net plant and equipment	$286,000		$270,000
Total assets	$401,200		$408,300
Liabilities and Equity
	2017		2018
Accounts payable	$48,000		$57,000
Accruals	6,000		5,000
Notes payable	15,000		13,000
Total current liabilities	$69,000		$75,000
Long-term debt	$160,000		$150,000
Common stockholders' equity	$172,200		$183,300
Total liabilities and equity	$401,200		$408,300

T. P. Jarmon Company Income Statement for Years Ended 12/31/2018
Sales			$600,000
Less cost of goods sold			460,000
Gross profit			$140,000
Operating and interest expenses
General and administrative	$30,000
Interest	10,000
Depreciation	30,000
Total operating and interest expenses			$70,000
Earnings before taxes			$70,000
Taxes			27,100
Net income available to common stockholders			$42,900
Cash dividends			31,800
Change in retained earnings			$11,100

b. Complete a statement of cash flows for the period.

c. Compute the changes in the balance sheets from 2017 to 2018.  

Answer 1

b)

Statement of Cash flows
Cash flows from Operating Activities
Net Income		42,900.00
Adjustments
Depreciation	30,000.00
Increase in Marketable Securities	-       200.00
Decrease in Account Receivable	9,000.00
Increase in Inventories	- 33,000.00
Decrease in Prepaid Rent	100.00
Increase in Accounts Payable	9,000.00
Decrease in Accruals	-   1,000.00	13,900.00
Net Cash flow from Operating Activities		56,800.00
Cash from flow from investing Activities
Purchase of plant and equipment		- 14,000.00
Cash flow from Investing Activities
Repayment of Notes Payable		-   2,000.00
Repayment of Long-term debt		- 10,000.00
Cash Dividends		- 31,800.00
Net Cash flow from Investing Activities		- 43,800.00
Net Decrease in Cash		-   1,000.00
Opening Cash Balance		15,000.00
Closing Cash Balance		14,000.00

c)

	2017	2018	Increase (Decrease)	Percentage Increase (Decrease)
Cash	15,000.00	14,000.00	-                      1,000.00	-6.67%
Marketable securities	6,000.00	6,200.00	200.00	3.33%
Accounts receivable	42,000.00	33,000.00	-                      9,000.00	-21.43%
Inventory	51,000.00	84,000.00	33,000.00	64.71%
Prepaid rent	1,200.00	1,100.00	-                          100.00	-8.33%
Total current assets	115,200.00	138,300.00	23,100.00	20.05%
Net plant and equipment	286,000.00	270,000.00	-                    16,000.00	-5.59%
Total assets	401,200.00	408,300.00	7,100.00	1.77%
Accounts payable	48,000.00	57,000.00	9,000.00	18.75%
Accruals	6,000.00	5,000.00	-                      1,000.00	-16.67%
Notes payable	15,000.00	13,000.00	-                      2,000.00	-13.33%
Total current liabilities	69,000.00	75,000.00	6,000.00	8.70%
Long-term debt	160,000.00	150,000.00	-                    10,000.00	-6.25%
Common stockholders' equity	172,200.00	183,300.00	11,100.00	6.45%
Total liabilities and equity	401,200.00	408,300.00	7,100.00	1.77%