Please use the attachment. - Jesse

Week 2 - Cash Flow Assignment - Background Info.

Below you are given an income statement (similar to what you put together in the Week 2 ? Income Statement Assignment) for the Crosby Corporation for the year ending 2011. Additionally you have been given comparative balance sheets for the years 2010 and 2011. Use the information below to create a statement of cash flows for the Crosby Corporation to answer the questions at the bottom (which are the same questions you will encounter when turning in the Week 2 - Cash Flow Assignment in Blackboard). Please be sure to read the sections in chapter 2 on Cash Flow Statements before attempting this assignment.

	Crosby Corporation
	Income statement
	For the year ended December 31, 2011
Sales		$2,200,000
Cost of goods sold		$1,300,000
Gross profit		$900,000
Selling and administrative expense		$420,000
Depreciation expense		$150,000
Operating income		$330,000
Interest expense		$90,000
Earnings before taxes		$240,000
Taxes		$80,000
Earnings after taxes		$160,000
Preferred stock dividends		$10,000
Earnings available to common stockholders	$150,000
Shares outstanding		$120,000
Earnings per share		$1.25
	Statement of Retained Earnings
	For the year ended December 31, 2011
Retained earnings, balance, January 1, 2011	$500,000
Add: earnings available to common stockholders, 2011	$150,000
Deduct: cash dividends declared and paid in 2011	$50,000
Retained earnings, balance, December 31, 2011	$600,000
	Comparative Balance Sheets for 2010 and 2011
	Assets
		Year-end 2010	Year-end 2011
Current assets:
Cash		$70,000		$100,000
Accounts receivable (net)		$300,000		$350,000
Inventory		$410,000		$430,000
Prepaid expenses		$50,000		$30,000
Total current assets		$830,000		$910,000
Investments (long-term securities)		$80,000		$70,000
Plant and equipment		$2,000,000		$2,400,000
Less: accumulated depreciation		$1,000,000		$1,150,000
Net plant and equipment		$1,000,000		$1,250,000
Total assets		$1,910,000		$2,230,000
	Liabilities and stockholder?s equity
Current liabilities:
Accounts payable		$250,000		$440,000
Notes payable		$400,000		$400,000
Accrued expenses		$70,000		$50,000
Total current liabilities		$720,000		$890,000
Long-term liabilities:
Bonds payable, 2011		$70,000		$120,000
Total liabilities		$790,000		$1,010,000
Stockholders equity:
Preferred stock, $100 par value		$90,000		$90,000
Common stock, $1 par value		$120,000		$120,000
Capital paid in excess of par		$410,000		$410,000
Retained earnings		$500,000		$600,000
Total stockholders equity		$1,120,000		$1,220,000
Total liabilities and stockholders equity		$1,910,000		$2,230,000

Question 1 (6 points) - What is the net income figure to use as a starting point for the statement of cash flows? Question 2 (16.22 points) - The total adjustments to net income to determine cash flows from operating activities are??(Hint: be sure to add up changes in current assets and current liabilities as noted on the balance sheet going from year 2010 to year 2011) to get the answer. Question 3 (11.11 points) - Net cash flows from operating activities are?..(Hint: don?t forget net income) Question 4 (11.11 points) - Cash flows from investing activities are?.. Question 5 (8.11 points) - Net Cash flows from investing activities are?. Question 6 (11.11 points) - Cash flows from financing activities are?. Question 7 (11.11 points) - Net Cash flows from financing activities are?. Question 8 (14.11 points) - The net increase/decrease in cash flows is?. Question 9 (11.11 points) - Compare your answer in number 8 with the change in the cash account on the balance sheet from 2010 going into 2011. What do you notice?

Week 2 - Cash Flow Assignment - Background Info. Below you are given an income statement (similar to what you put together in the Week 2 - Income Statement Assignment) for the Crosby Corporation for the year ending 2011. Additionally you have been given comparative balance sheets for the years 2010 and 2011. Use the information below to create a statement of cash flows for the Crosby Corporation to answer the questions at the bottom (which are the same questions you will encounter when turning in the Week 2 - Cash Flow Assignment in Blackboard). Please be sure to read the sections in chapter 2 on Cash Flow Statements before attempting this assignment. Crosby Corporation Income statement For the year ended December 31, 2011 Sales Cost of goods sold Gross profit Selling and administrative expense Depreciation expense Operating income Interest expense Earnings before taxes Taxes Earnings after taxes Preferred stock dividends Earnings available to common stockholders Shares outstanding Earnings per share $2,200,000 $1,300,000 $900,000 $420,000 $150,000 $330,000 $90,000 $240,000 $80,000 $160,000 $10,000 $150,000 $120,000 $1.25 Statement of Retained Earnings For the year ended December 31, 2011 Retained earnings, balance, January 1, 2011 Add: earnings available to common stockholders, 2011 Deduct: cash dividends declared and paid in 2011 Retained earnings, balance, December 31, 2011 $500,000 $150,000 $50,000 $600,000 Comparative Balance Sheets for 2010 and 2011 Assets Year-end 2010 Current assets: Cash Accounts receivable (net) Inventory Prepaid expenses Total current assets Investments (long-term securities) Plant and equipment Less: accumulated depreciation Net plant and equipment Total assets Year-end 2011 $70,000 $300,000 $410,000 $50,000 $830,000 $80,000 $2,000,000 $1,000,000 $1,000,000 $1,910,000 $100,000 $350,000 $430,000 $30,000 $910,000 $70,000 $2,400,000 $1,150,000 $1,250,000 $2,230,000 $250,000 $400,000 $70,000 $720,000 $440,000 $400,000 $50,000 $890,000 $70,000 $790,000 $120,000 $1,010,000 $90,000 $120,000 $410,000 $500,000 $90,000 $120,000 $410,000 $600,000 Liabilities and stockholder's equity Current liabilities: Accounts payable Notes payable Accrued expenses Total current liabilities Long-term liabilities: Bonds payable, 2011 Total liabilities Stockholders equity: Preferred stock, $100 par value Common stock, $1 par value Capital paid in excess of par Retained earnings Total stockholders equity Total liabilities and stockholders equity $1,120,000 $1,220,000 $1,910,000 $2,230,000 Question 1 (6 points) - What is the net income figure to use as a starting point for the statement of cash flows? Question 2 (16.22 points) - The total adjustments to net income to determine cash flows from operating activities are......(Hint: be sure to add up changes in current assets and current liabilities as noted on the balance sheet going from year 2010 to year 2011) to get the answer. Question 3 (11.11 points) - Net cash flows from operating activities are.....(Hint: don't forget net income) Question 4 (11.11 points) - Cash flows from investing activities are..... Question 5 (8.11 points) - Net Cash flows from investing activities are.... Question 6 (11.11 points) - Cash flows from financing activities are.... Question 7 (11.11 points) - Net Cash flows from financing activities are.... Question 8 (14.11 points) - The net increase/decrease in cash flows is.... Question 9 (11.11 points) - Compare your answer in number 8 with the change in the cash account on the balance sheet from 2010 going into 2011. What do you notice? ANSWER a. Net income =$160,000 b. Adjustments: Add back: Depreciation Interest expense $150,000 90,000 Changes in working capital: Add back: Increase in accounts payable Decrease in prepaid expense Less: Increase in accounts receivable Increase in inventory Decrease in accrued expense Total adjustments c. 190,000 20,000 (50,000) (20,000) (20,000) 360,000 Cash flow from operating activities 520,000 d. Cash flow from investing activities: Purchase of plant and equipment (400,000) Sale of investment 10,000 Net cash flow from investing (390,000) e. Cash flow from financing activities: Issue of bonds payable 50,000 Interest expense paid (90,000) Dividends paid to preferred stockholder (10,000) Dividends to common stockholders (50,000) Net cash flow from financing (100,000) f. Net change in cash flow 30,000 g. They both add up to the ending balance. Add beginning balance Ending balance 70,000 100,0000 13 ANSWERS 1. Net income =$160,000 2. Adjustments: Add back: Depreciation Interest expense Changes in working capital: Add back: Increase in accounts payable Decrease in prepaid expense $150,000 90,000 190,000 20,000 Less: Increase in accounts receivable Increase in inventory Decrease in accrued expense Total adjustments (50,000) (20,000) (20,000) 360,000 3. Cash flow from operating activities 520,000 4. Cash flow from investing activities: Purchase of plant and equipment Sale of investment (400,000) 10,000 5. Net cash flow from investing (390,000) 6. Cash flow from financing activities: Issue of bonds payable Interest expense paid Dividends paid to preferred stockholder Dividends to common stockholders 50,000 (90,000) (10,000) (50,000) 7. Net cash flow from financing (100,000) 8. Net change in cash flow 9. They both add up to the ending balance. Add beginning balance 70,000 Ending balance 100,0000 30,000 Week 2 - Cash Flow Assignment - Background Info. Below you are given an income statement (similar to what you put together in the Week 2 - Income Statement Assignment) for the Crosby Corporation for the year ending 2011. Additionally you have been given comparative balance sheets for the years 2010 and 2011. Use the information below to create a statement of cash flows for the Crosby Corporation to answer the questions at the bottom (which are the same questions you will encounter when turning in the Week 2 - Cash Flow Assignment in Blackboard). Please be sure to read the sections in chapter 2 on Cash Flow Statements before attempting this assignment. Crosby Corporation Income statement For the year ended December 31, 2011 Sales Cost of goods sold Gross profit Selling and administrative expense Depreciation expense Operating income Interest expense Earnings before taxes Taxes Earnings after taxes Preferred stock dividends Earnings available to common stockholders Shares outstanding Earnings per share $2,200,000 $1,300,000 $900,000 $420,000 $150,000 $330,000 $90,000 $240,000 $80,000 $160,000 $10,000 $150,000 $120,000 $1.25 Statement of Retained Earnings For the year ended December 31, 2011 Retained earnings, balance, January 1, 2011 Add: earnings available to common stockholders, 2011 Deduct: cash dividends declared and paid in 2011 Retained earnings, balance, December 31, 2011 $500,000 $150,000 $50,000 $600,000 Comparative Balance Sheets for 2010 and 2011 Assets Year-end 2010 Current assets: Cash Accounts receivable (net) Inventory Prepaid expenses Total current assets Investments (long-term securities) Plant and equipment Less: accumulated depreciation Net plant and equipment Total assets Year-end 2011 $70,000 $300,000 $410,000 $50,000 $830,000 $80,000 $2,000,000 $1,000,000 $1,000,000 $1,910,000 $100,000 $350,000 $430,000 $30,000 $910,000 $70,000 $2,400,000 $1,150,000 $1,250,000 $2,230,000 $250,000 $400,000 $70,000 $720,000 $440,000 $400,000 $50,000 $890,000 $70,000 $790,000 $120,000 $1,010,000 $90,000 $120,000 $410,000 $500,000 $90,000 $120,000 $410,000 $600,000 Liabilities and stockholder's equity Current liabilities: Accounts payable Notes payable Accrued expenses Total current liabilities Long-term liabilities: Bonds payable, 2011 Total liabilities Stockholders equity: Preferred stock, $100 par value Common stock, $1 par value Capital paid in excess of par Retained earnings Total stockholders equity Total liabilities and stockholders equity $1,120,000 $1,220,000 $1,910,000 $2,230,000 Question 1 (6 points) - What is the net income figure to use as a starting point for the statement of cash flows? Question 2 (16.22 points) - The total adjustments to net income to determine cash flows from operating activities are......(Hint: be sure to add up changes in current assets and current liabilities as noted on the balance sheet going from year 2010 to year 2011) to get the answer. Question 3 (11.11 points) - Net cash flows from operating activities are.....(Hint: don't forget net income) Question 4 (11.11 points) - Cash flows from investing activities are..... Question 5 (8.11 points) - Net Cash flows from investing activities are.... Question 6 (11.11 points) - Cash flows from financing activities are.... Question 7 (11.11 points) - Net Cash flows from financing activities are.... Question 8 (14.11 points) - The net increase/decrease in cash flows is.... Question 9 (11.11 points) - Compare your answer in number 8 with the change in the cash account on the balance sheet from 2010 going into 2011. What do you notice