Question

Use the balance sheet and income statement below to prepare a statement of cash flows for Valium’s Medical Supply Corporation. (Enter your answers in thousands. Amounts to be deducted should be indicated with a minus sign.)

VALIUM’S MEDICAL SUPPLY CORPORATION
Balance Sheet as of December 31, 2018 and 2017
(in thousands of dollars)
Assets	2018				2017				Liabilities and Equity	2018				2017
Current assets:									Current liabilities:
Cash and marketable securities	$	79			$	78			Accrued wages and taxes	$	60			$	48
Accounts receivable		192				188			Accounts payable		153				148
Inventory		318				298			Notes payable		138				138
Total	$	589			$	564			Total	$	351			$	334
Fixed assets:									Long-term debt	$	594			$	570
Gross plant and equipment	$	1,094			$	896			Stockholders’ equity:
Less: Accumulated depreciation		160				120			Preferred stock (6 thousand shares)	$	6			$	6
Net plant and equipment	$	934			$	776			Common stock and paid-in surplus (100 thousand shares)		120				120
Other long-term assets		148				148			Retained earnings		600				458
Total	$	1,082			$	924			Total	$	726			$	584
Total assets	$	1,671			$	1,488			Total liabilities and equity	$	1,671			$	1,488

VALIUM’S MEDICAL SUPPLY CORPORATION
Income Statement for Years Ending December 31, 2018 and 2017
(in thousands of dollars)
	2018				2017
Net sales	$	906			$	816
Less: Cost of goods sold		396				359
Gross profits	$	510			$	457
Less: Other operating expenses		54				48
Earnings before interest, taxes, depreciation, and amortization (EBITDA)	$	456			$	409
Less: Accumulated depreciation		40				38
Earnings before interest and taxes (EBIT)	$	416			$	371
Less: Interest		55				49
Earnings before taxes (EBT)	$	361			$	322
Less: Taxes		138				118
Net income	$	223			$	204
Less: Preferred stock dividends	$	6			$	6
Net income available to common stockholders	$	217			$	198
Less: Common stock dividends		75				75
Addition to retained earnings	$	142			$	123
Per (common) share data:
Earnings per share (EPS)	$	2.17			$	1.98
Dividends per share (DPS)	$	0.75			$	0.75
Book value per share (BVPS)	$	7.20			$	5.78
Market value (price) per share (MVPS)	$	8.23			$	6.26

Statement of Cash Flows for Year Ending December 31, 2018 (in thousands of dollars) Cash flows from operating activities Net income Additions (sources of cash): Depreciation Increase in accounts payable Increase in accrued wages and taxes Subtractions (uses of cash): Increase in accounts receivable Increase in inventory Net cash flow from operating activities Cash flows from investing activities Subtractions: Increase in fixed assets Increase in other long-term assets Net cash flow from investing activities Cash flows from financing activities Additions: Increase in common and preferred stock Increase in long-term debt Increase in notes payable Subtractions: Common stock dividends Preferred stock dividends Net cash flow from financing activities Net change in cash and marketable securities

Answer 1

Statement of Cash Flows for Year Ending December 31, 2018 (In thousands of dollars)
			Cash flows from operating activities
Net income	223
Additions (sources of cash):
Depreciation	40
Increase in accounts payable	5
Increase in accrued wages and taxes	12
Subtractions (uses of cash):
Increase in accounts receivable	4
Increase in inventory	20
Net cash flow from operating activities		256
Cash flows from investing activities
Subtractions:
Increase in fixed assets	198
Increase in other long-term assets	0
Net cash flow from investing activities		-198
Cash flows from financing activities
Additions:
Increase in common and preferred stock	0
Increase in long-term debt	24
Increase in notes payable	0
Subtractions:
Common stock dividends	75
Preferred stock dividends	6
Net cash flow from financing activities		-57
Net change in cash and marketable securities		1

WORKINGS