Cash Flows and Financial Statements at Sunset Boards, Inc. Sunset Boards is a small company that...

Transcribed Image Text:

Cash Flows and Financial Statements at Sunset Boards, Inc. Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the company's financial records are not well maintained. The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors haven't required detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. Tad's expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Sierra Reid to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Sierra has assembled the following information: 2021 2022 Cost of goods sold Cash $323,077 $339,937 46,615 41,273 Depreciation 91,201 85,901 Interest expense 19,848 18,936 Selling and administrative expenses 53,534 69,103 Accounts payable 82,397 76,175 Net fixed assets 402,364 438,210 Sales Accounts receivable Notes payable 633,775 643,780 33,032 35,706 37,554 34,169 Long-term debt Inventory New equity Sunset Boards currently pays out 50 percent of net income as dividends to Tad and the other original investors and has a 21 percent tax rate. You are Sierra's assistant, and he has asked you to prepare the following: 203,098 190,042 69,511 79,493 0 14,511 1. An income statement for 2021 and 2022. 2. A balance sheet for 2021 and 2022. 3. Operating cash flow for each year. 4. Cash flow from assets for 2022. 5. Cash flow to creditors for 2022. 6. Cash flow to stockholders for 2022. Cash Flows and Financial Statements at Sunset Boards, Inc. Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the company's financial records are not well maintained. The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors haven't required detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include opening another surfboard store in Hawaii, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. Tad's expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more organized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired financial analyst Sierra Reid to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Sierra has assembled the following information: 2021 2022 Cost of goods sold Cash $323,077 $339,937 46,615 41,273 Depreciation 91,201 85,901 Interest expense 19,848 18,936 Selling and administrative expenses 53,534 69,103 Accounts payable 82,397 76,175 Net fixed assets 402,364 438,210 Sales Accounts receivable Notes payable 633,775 643,780 33,032 35,706 37,554 34,169 Long-term debt Inventory New equity Sunset Boards currently pays out 50 percent of net income as dividends to Tad and the other original investors and has a 21 percent tax rate. You are Sierra's assistant, and he has asked you to prepare the following: 203,098 190,042 69,511 79,493 0 14,511 1. An income statement for 2021 and 2022. 2. A balance sheet for 2021 and 2022. 3. Operating cash flow for each year. 4. Cash flow from assets for 2022. 5. Cash flow to creditors for 2022. 6. Cash flow to stockholders for 2022.