COMPARATIVE STATEMENT OF FINANCIAL POSITION
As of May 31
2005 2004
Current assets:
Cash $33250 $20000
Accounts Receivable 80000 58000
Merchandise Inventory 210000 250000
Prepaid expenses 9000 7000
Total current assets 332250 335000
Plant Assets:
Plant assets 600000 502000
Less: Accumulated Depreciation 150000 125000
Net plant assets 450000 377000
Total Assets 782250 712000
Current Liabilities
Accounts Payable $123000 $115000
Salaries payable 47250 72000
Interest Payable 27000 25000
Total current liabilities 197250 212000
Long-term Debt:
Bonds Payable 70000 100000
Total Liabilities 267250 312000
Shareholders' Equity
Common stock, $10 par 370000 280000
Retained Earnings 145000 120000
Total Shareholders' equity 515000 400000
Total liabilities & shareholder equity 782250 712000
INCOME STATEMENT
FYE May 31,2005
Sales 1255250
Cost of merchandise sold 722000
Gross Profit 533250
Expenses:
Salary exp 252100
Interest exp. 75000
Other exp. 8150
Depreciation exp. 25000
Total Expenses 360250
Operating income 173000
Income tax expense 43000
Net Income 130000
**Additional Info.
1-All sales during year were made on account
2-All merchandise was purchased on account, comprising the total accounts
payable account
3-Plant assets costing $98,000 were purchased by paying $48,000 in cash and
issuing 5000 shares of stock
4-The "other expenses" are related to prepaid items |
Clarification of Question by
gmurda-ga
on
06 Aug 2005 12:35 PDT
need answer by 8/7/2005
|
Request for Question Clarification by
omnivorous-ga
on
06 Aug 2005 15:22 PDT
Gmurda --
Can you check your numbers here please? Some things don't make sense.
Retained earnings increase by $25,000 despite a net income of $130,000
for the year. This is possible only if the firm is paying dividends
of $105,000 -- and you don't show any dividends being paid.
Best regards,
Omnivorous-GA
|
Clarification of Question by
gmurda-ga
on
06 Aug 2005 16:37 PDT
These are the numbers as I have them, I have rechecked and all the
numbers are correct with no mention of dividends. I just need the
operating, investing, and financing cash flows for year ended. I hope
this is enough for you to get things done.
Thanks,
Gmurda
|
Gmurda ?
There are several good resources on preparing cash flow statements, including:
Small Business Administration Women?s Enterprise Center
?Preparing Your Cash Flow Statement? (Aug. 10, 2001)
http://www.onlinewbc.gov/docs/finance/cashflowex.html
and Merrill Lynch?s venerable publication, which I?d recommend
printing out and keeping in a binder:
Merrill Lynch
?How to Read a Financial Report? (undated)
http://philanthropy.ml.com/ipo/resources/pdf/howtoreadfinreport.pdf
Basically the process of determining cash flow is outlined as follows:
1. start with net income
2. add back non-cash charges ? the most-common being depreciation & amortization
3. next, look at your operating categories to see if cash was used
(put it in brackets, it?s negative) or reduced (positive).
4. next, look at your investments ? the purchase of equipment; changes
in notes payable; purchases or sale common stock
5. as a check, if it?s done properly the change in cash will match the
increase of $13,250 that you?re seeing in cash on the Statement of
Financial Position.
The hardest part is probably looking at the statement and knowing
whether cash in coming in or going out. Just look at category like
?salaries payable? and say:
?Did the reduction in payables from $72,000 to $47,250 use cash??
It?s the only way employees get paid, so of course it did!
However, as mentioned, this financial statement has a little catch to
it ? you?re not shown the cash outflow for the dividends. As
previously mentioned, it?s $105,000 ? and could come in the form of
preferred dividends, common stock dividends. (The only other way that
this would work is if someone embezzled $105,000 . . .)
Because it?s so much easier to format information ? not to mention
being easier to do the calculations, I?ve put all of this into a
spreadsheet:
http://www.mooneyevents.com/statement.xls
Google search strategy:
Preparing ?cash flow? statement
Best regards,
Omnivorous-GA |
Request for Answer Clarification by
gmurda-ga
on
06 Aug 2005 16:49 PDT
please work it as if there was $105,000 in dividends
|
Clarification of Answer by
omnivorous-ga
on
06 Aug 2005 16:50 PDT
Gmurda --
Already done.
Best regards,
Omnivorous-GA
|
Request for Answer Clarification by
gmurda-ga
on
06 Aug 2005 16:52 PDT
Well then where are the cash flows from financing activities??
|
Clarification of Answer by
omnivorous-ga
on
06 Aug 2005 16:53 PDT
See the spreadsheet . . .
|
Request for Answer Clarification by
gmurda-ga
on
06 Aug 2005 16:55 PDT
The spreadsheet I have only has operating and investing, but no financing activites.
|
Request for Answer Clarification by
gmurda-ga
on
06 Aug 2005 16:56 PDT
Cash Flow Statement
Operating Cash Flow
Net income after tax $130,000
Depreciation $25,000
Change in AR ($22,000)
Change in inventory $40,000
Change in AP $8,000
Change in salaries payable ($24,750)
Change in interest payable $2,000
Change in prepaid expenses ($2,000)
TOTAL Operating cash flow = $156,250
Investing Cash Flow
Change in bonds payable ($30,000)
Purchase of equipment ($98,000)
Stock issued (9,000 shares) $90,000
Dividends paid ($105,000)
TOTAL Investing cash flow - ($143,000)
CHANGE IN CASH, FYE 2005 $13,250
Omnivorous-GA
Aug. 6, 2005
SEE************
|
Clarification of Answer by
omnivorous-ga
on
06 Aug 2005 16:57 PDT
The investing includes all financing activities. If you wanted to
split "investing" and "financing," only the dollars spent on the plant
are "investing."
Best regards,
Omnivorous-GA
|
Request for Answer Clarification by
gmurda-ga
on
06 Aug 2005 16:59 PDT
Thanks omnivorous
|
Clarification of Answer by
omnivorous-ga
on
06 Aug 2005 16:59 PDT
No problem!
|
Request for Answer Clarification by
gmurda-ga
on
06 Aug 2005 17:52 PDT
I needed a DIRECT Statement of Cash Flows not indirect. The investing
and financing activities stay the same but the operating is different.
pLease change.
Gmurda
|
Request for Answer Clarification by
gmurda-ga
on
06 Aug 2005 18:13 PDT
DIRECT statement as it was origionally stated in the question.
|
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