I am not able to transfer information from a balance sheet in balance
sheet form to this area, so I need to type it all in sentance form.
Question:
ABC Corporations' coomparative balance sheets at December 31 (in
millions):

Assets for 2001 are as follows...
Cash is $5, Accounts receivable 15, Inventories 12, Fixed assets,net
50, Other assets 8, Total assets $90.  The 2002 assets are
3,22,15,55,5,total $100. The right hand side of the balance sheet has
the Liabilities and Equity.  2001: Notes payable $20, Accounts payable
5, Accured wages 2, Accured taxes 3, Long-term debt 0, Common stock
20, Retained earnings 40, Total liabilities and equity is $90.  2002:
0,8,2,5,15,26,44,Total $100.

ABC Corp. statement of income and retained earnings year ended Dec.
31,2002.

Net sales $48,000,000, Expenses: Cost of goods sold $25,000,000,
Selling,general,and administrative 5,000,000, Depreciation 5,000,000,
Interest 2,000,000 and 37,000,000, Net income before taxes 11,000,000,
Less:Taxes 4,000,000, Net income 7,000,000, Add:Retained earnings at
12/31/01 40,000,000, Subtotal 47,000,000, Less:Dividends 3,000,000,
Retained earnings at 12/31/02 44,000,000.

Prepare a source and use of funds statemtnt on a cash basis for 2002
for the ABC Corp.

As always, your prompt response is appreciated.  Please forgive the
format.
Thank You !!!!!

Hi jimmy5!
The Source and Application of Funds statement show how the company has
obtained financing (the source) and how it spent it. The basic idea is
that an:

Decrease in Liabilities is a Use of Funds
Decrease in O&E is a Use of Funds
Increase in Assests is a Use of Funds
Increase in Liabilities is a Source of Funds
Increase in O&E is a Source of Funds
Decrease in Assets is a Source of Funds

You can check the following page to see what items go into the source
and the application of funds section of the statement.

DeskDemon Information Index
http://www.deskdemon.com/pages/uk/finance/sourceappn

Let's first see what were the changes in the balance sheet from 2001
to 2002:

     Assets                Liabilities and Equity
Cash              -2      Notes payable      -20
Acc. Receivable   +7      Acc. payable       +3
Inventories       +3      Accrued wages      0
Fixed Assets      +5      Accrued taxes      +2
Other Assests     -3      Long-term debt     +15
                          Common stock       +6
                          Ret. Earnings      +4

So now, also using the information from the income statement, we can
build the source and application of funds statement:

    Sources of Funds                 Uses of funds
Net Income After Tax       7     Accounts receivable      7
                                 Inventories              3
Other assets (disposal)    3     Fixed Assets             5
Accounts payable           3     Notes payable (payment) 20
Accrued taxes              2     Dividends paid           3
Long-term debt (issuance) 15     
Common stock (issuance)    6

Total                     36                         38

As you can see, the total for the sources of funds, like in a balance
sheet, must equal the total for the uses of funds. The difference
between the sources and the uses of funds make up for the decrease of
2 of the company's cash.


I hope this helps! If you have any doubt regarding my answer, please
don't hesitate to request a clarification. Otherwise I await your
rating and comments.

Best wishes!
elmarto

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Request for Answer Clarification by jimmy5-ga on 10 Oct 2003 15:56 PDT

You were wrong!!

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Clarification of Answer by elmarto-ga on 12 Oct 2003 16:37 PDT

Hi jimmy5,
Could you please specify the mistake or mistakes you've found? I've
always done these kind of statements this way, but the presentation
could change... if you can tell me what you've found to be wrong about
it, I will repost a corrected version as soon as possible.

Best regards,
elmarto

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Request for Answer Clarification by jimmy5-ga on 12 Oct 2003 19:44 PDT

Sources and uses need to equal, so you have to take the depreciation
expense plus the net fixed assets in 2002 minus the net fixed assets
from 2001.  This will give you a total of $43 million in source and
use.

I do have another case for you to work on if you are intrested.  It
pays $100.00 but it's kinda long, so I'm not sure how I can get it to
you.  If you have any idea let me know.

Thanks

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Clarification of Answer by elmarto-ga on 13 Oct 2003 16:00 PDT

Hi jimmy5,
You're right, I neglected to include the depreciation as a source of
funds... I'm very, very sorry, I hope this didn't cause you much
trouble.

Regarding the long work, currently Google Answers only allows
questions to be posted to the site rather than e-mailed to GA
Researchers. If it's uncomfortable for you to post it here (I know
that the text-only format can be rather annoying for some questions),
you might want to set up a web page and put your question in .pdf or
.doc format (or whatever) available for download from that page. Free
web hosting can be obtained at several sites, such as:

Yahoo! GeoCities
http://geocities.yahoo.com/

Angelfire
http://www.angelfire.lycos.com/

Once you've setup the page, just post the question in Google Answers,
stating the internet address to download the directions.

I hope that approach works for you. In any case, I suggest you write
to answers-support@google.com and ask what you can do.

Sorry again for the mistake.
Best wishes!
elmarto

Very good