Acme Company has the following balance sheet (in millions) on December 31, 2021, shown with the comparative
Question:
Acme Company has the following balance sheet (in millions) on December 31, 2021, shown with the comparative numbers for 2020.
In addition to the below information, the following occurred during 2021:
· The company had a net loss in 2021 of $45 million, but it distributed a dividend of $10 million.
· Capital was raised by issuing notes for $40 million and issuing preferred stock for $20 million.
· Payment of $10 million was made to retire long-term debt/note during the period.
· Proceeds from the capital issues were used in part to acquire a building for $35 million.
· There was no sale of land or building during the year.
· Depreciation of $15 million was recorded.
· Investments costing $40 million were sold at a gain of $5 million.
1. Prepared a Statement of Cash Flow for SMG company at Dec 31, 2021, using the indirect method
2. What can you learn about the health of the company from this Statement of Cash Flows?
Dec 31, 2021 | Dec 31, 2020 | |
Assets | ||
Current assets: | ||
Cash | 25 | 35 |
Accounts receivable | 30 | 35 |
Inventory | 50 | 35 |
Noncurrent assets: | ||
Building and equipment | 100 | 80 |
(net of accumulated depreciation) | ||
Land | 30 | 30 |
Investments | 40 | 80 |
Total Assets | 275 | 295 |
Liabilities and Stockholders' Equity | ||
Current liabilities: | ||
Accounts payable | 35 | 25 |
Unearned revenue | 10 | 35 |
Long term liabilities: | ||
Notes payable | 80 | 50 |
Stockholders' equity: | ||
Common stock | 50 | 50 |
Preferred stock | 40 | 20 |
Retained earnings | 60 | 115 |
Total Liabilities and Equity | 275 | 295 |
Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta