Question

Carter Corporation Income Stmt and Comparative Balance Sheet

Refer to the following financial statements for Crosby Corporation:   
  

CARTER CORPORATION Income Statement For the Year Ended December 31, 20X2
Sales		$	3,000,000
Cost of goods sold			2,544,000
Gross profit		$	456,000
Selling and administrative expense			90,000
Depreciation expense			100,000
Operating income		$	266,000
Interest expense			66,000
Earnings before taxes		$	200,000
Taxes			80,000
Earnings after taxes		$	120,000

  

  

Statement of Retained Earnings For the Year Ended December 31, 20X2
Retained earnings, balance, January 1, 20X2	$	730,000
Add: Earnings available to common stockholders, 20X2		120,000
Deduct: Cash dividends declared and paid in 20X2		100,000
Retained earnings, balance, December 31, 20X2	$	750,000

Comparative Balance Sheets For 20X2 and 20X1
	Year-End 20X2				Year-End 20X1
Assets
Current assets:
Cash		$	50,000			$	55,000
Accounts receivable (net)			350,000				315,000
Inventory			300,000				215,000
Prepaid expenses			0				25,000
Total current assets		$	700,000			$	610,000
Gross plant and equipment	$ 1,800,000				$ 1,470,000
Less: Accumulated depreciation	500,000				400,000
Net plant and equipment			1,300,000				1,070,000
Total assets		$	2,000,000			$	1,680,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	60,000			$	30,000
Notes payable			100,000				60,000
Accrued expenses			140,000				130,000
Total current liabilities		$	300,000			$	220,000
Long-term liabilities:
Bonds payable, 20X2			800,000				580,000
Total liabilities		$	1,100,000			$	800,000
Stockholders’ equity:
Preferred stock, $100 par value		$	0			$	0
Common stock, $1 par value			50,000				50,000
Capital paid in excess of par			100,000				100,000
Retained earnings			750,000				730,000
Total stockholders’ equity		$	900,000			$	880,000
Total liabilities and stockholders’ equity		$	2,000,000			$	1,680,000

Cash Identity Stmt
Cash Flow From Assets						Cash Flow to Creditors
Operating Cash Flow:						Interest Expense	answer
EBIT	Answer					Less: Net New Borrowing (LTD)	answer
+Depreciation	Answer					Cash Flow to Creditors		answer                -
- Taxes	Answer
Operating Cash Flow		-   answer
						Cash Flow to Owners
Less: Net Capital Spending						Dividends(PS)	answer
Ending Fixed Assets - Beginning Fixed Assets	answer					Dividends(CS)	answer
+Depreciation	answer					Less: Net New Borrowing from Owners	- answer
Net Capital Spending		answer                    -				Cash Flow to Owners		Answer-
Less: Change in Net Working Capital
Ending NWC - Beginning NWC	answer	answer                    -
CASH FLOW FROM ASSETS		$       answer               -		=		CF TO CREDITOR + CF TO OWNERS		$                    answer-

Answer 1

Cash Identity statement Cash flows from asset Cash flows to creditors Operating Cash flow: Interest expense -66000 EBIT 266000 Less : Net New Borrowing(LTD) 220000 +Depreciation 100000 Cash flows to creditors 154000 -Taxes -80000 Operating Cash flow 286000 Cash flows to Owners Less : Net Capital spending Dividends(preferred stock) 0 Ending Fixed assets-Beginning fixed assets 230000 Dividends(common stock) -100000 Less : Net new borrowing from Owners 0 +Depreciation 100000 Net Capital spending -330000 Cash flows to Owners -100000 Less : Change in Net Working capital Ending NWC-Beginning NWC -10000 Cash flow from assets -54000 Cash flows to creditors + Cash flows to Owners 54000 Note : Cash outflows has been represented with (-)minus sign while cash inflows has positive.