Question

The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020:

	($ in thousands)
	2021				2020
Income statement information
Net sales	$	5,700			$	4,700
Net income		330				134
Balance sheet information
Current assets	$	850			$	800
Property, plant, and equipment (net)		1,550				1,200
Total assets	$	2,400			$	2,000
Current liabilities	$	1,000			$	650
Long-term liabilities		800				800
Common stock		400				400
Retained earnings		200				150
Liabilities and shareholders’ equity	$	2,400			$	2,000

Required:

1. Determine the following ratios for 2021: (Round your percentage answers to 1 decimal place.)
2. Determine the amount of dividends paid to shareholders during 2021. (Enter your answers in whole dollars, not in thousands. For example, $150,000 rather than 150.)

Chew Corporation prepares its statement of cash flows using the indirect method of reporting operating activities. Net income for the 2021 fiscal year was $1,252,000. Depreciation expense of $142,000 was included with operating expenses in the income statement. The following information describes the changes in current assets and liabilities other than cash:

Increase in accounts receivable	$	154,000
Decrease in inventory		110,000
Decrease in prepaid expenses		64,000
Decrease in salaries payable		32,000
Increase in income taxes payable		46,000

Required:
Prepare the cash flows from operating activities for 2021. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

2.

Retained earnings, 2020	$        150,000
Add: Net income for 2021	$        330,000
Less: Retained earnings 2021	$      (200,000)
Dividends paid in 2021	$        280,000

3.

Cash flows from operating activities
Net income		$   1,252,000
Adjustments to reconcile net income to ;
Net cash provided by operating activities
Depreication	$    142,000
Increase in accounts receivable	$ (154,000)
Decrease in inventories	$    110,000
Decrease in prepaid expenses	$       64,000
Decrease in salaries payable	$    (32,000)
Increase in income tax payable	$       46,000
		$      176,000
Net cash provided by operating activities		$   1,428,000

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