The Seymour Corp. attempted to increase sales rapidly in 20X1 by offering a new, low-cost product line designed to appeal to credit customers in relatively poor financial condition. The company sold no new stock during the year but paid dividends of $3,000,000. Depreciation for the year was $7,851,000, and no fixed assets were retired or sold. The firm had the following financial statements for 20X1.

a. Without preparing a statement of cash flows, examine the changes in each balance sheet account and summarize in rough terms where Seymour got its cash and what it spent the money on. Include the sum of net income and depreciation as a source of cash.
b. Construct a statement of cash flows for Seymour Corp. How does the information available from the statement compare with the results of your analysis in part a?
c. Does it look like Seymour may be headed for financial trouble? Explain the possible implications of the new product and credit strategy on individual accounts.

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Seymour Corp Balance Sheet For the period ended 12/31/x1 Seymour Corp Income Statement For the period ended 12/31/x1 ASSETS $88,765 39,506 $ 2,745 1,071 Gross margin $49,259 S34,568 14,691 4,312 $10,379 4,152 $ 6,227 Revenue 12/31/XO 12/31/X1 COGS Cash Receivables Inventory CURRENT ASSETS Fixed assets 19,842 10,045 24,691 Expenses 15,621 EBIT $32,632 S41,383 Interest EBT Tax (60,225 (68,076) EAT $80,128 $97,432 Gross Accum. deprec. Net $19,903 $29,356 $52,535 S70,739 Total assets LIABILITIES AND EQUITY $ 3,114 S 6,307 914 CURRENT LIABILITIES $ 3,882 $ 7,221 $36,490 $48,128 12,163 15,390 $48,653 $63,518 Accts payable Accruals 768 Long-term debt Equity TOTAL CAPITAL TOTAL LIABILITY AND EQUITY $52,535 S70,739