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OPQ, Inc. 2018 statement of comprehensive income Net sales $8,953 Cost of goods sold $5,865 Depreciation...

OPQ, Inc.
2018 statement of comprehensive
income

Net sales

$8,953

Cost of goods sold

$5,865

Depreciation

$?

EBIT

$?

Interest paid

$675

Earnings before taxes

$675

Taxes

$400

Net income

$705

Dividends paid

$?

Addition to retained earnings

$450

OPQ, Inc.
Statement of financial positions as of December 31, 2017 and 2018

2017

2018

2017

2018

Cash

$725

$1,135

Accounts payable

$859

$1,031

Accounts rec.

$2,330

$?

Notes payable

$?

$4,020

Inventory

$3,240

$5, 202

Current liabilities

$?

$?

Current assets

$?

$?

Long-term debt

$9,250

$9,750

Net fixed assets

$?

$9,211

Common stock

$250

$?

Retained earnings

$?

$2,797

Total assets

$16,083

$17,848

Total liab. & equity

$?

$?

The cash flow to creditors for 2018 is ______ while the cash flow to stockholders for 2018 is _____.
A. -$640; $705
B. -$175; $255
C. $175; $255
D. $175; $450
E. $640; $450

Explain the whole process, please!

Solutions

Expert Solution

Answer:
Cash Flow to Creditors:
Net New Borrowing = Long Term Debt, 2018 - Long Term Debt, 2017
Net New Borrowing = $9,750 - $9,250
Net New Borrowing = $500

Cash Flow to Creditors = Interest Paid - Net New Borrowing
Cash Flow to Creditors = $675 - $500
Cash Flow to Creditors = $175

Cash Flow to Stockholders:
Total Assets, 2018 = Total Liabilities and Equity, 2018
Total Liabilities and Equity, 2018 = $17,848

Current Liabilities = Accounts Payable + Notes Payable
Current Liabilities, 2018 = $1,031 + $4,020
Current Liabilities, 2018 = $5,051

Total Liabilities = Current Liabilities + Long Term Debt
Total Liabilities, 2018 = $5,051 + $9,750
Total Liabilities, 2018 = $14,801

Total Liabilities and Equity = Total Liabilities + Total Equity
$17,848 = $14,801 + Total Equity, 2018
Total Equity, 2018 = $3,047

Total Equity = Common Stock + Retained Earnings
$3,047 = Common Stock, 2018 + $2,797
Common Stock, 2018 = $250

Net New Equity Issued = Common Stock, 2018 - Common Stock, 2017
Net New Equity Issued = $250 - $250
Net New Equity Issued = $0

Dividend Paid = Net Income – Addition to Retained Earnings
Dividend Paid = $705 - $450
Dividend Paid = $255

Cash Flow to Stockholders = Dividend Paid - Net New Equity Issued
Cash Flow to Stockholders = $255 - $0
Cash Flow to Stockholders = $255

Option C is Correct.

jeff jeffy answered 1 year ago
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