Score: 100/100 Points 100 %

  
 1. Award: 25 out of 25.00 points  

Given is the Income Statement for the year ended December 31, 20XX, Statement of Retained Earnings for the year ended
December 31, 20XX and Comparative Balance Sheets for 20XW and 20XX of Maris Corporation:

Maris Corporation
Income Statement
Year Ended December 31, 20XX
Sales $4,100,000
Cost of goods sold 2,475,000

Gross profits 1,625,000

Selling and administrative expense 570,000
Amortization expense 230,000

Operating income 825,000

Interest expense 46,000

Earnings before taxes 779,000

Taxes 470,000

Earnings after taxes 309,000

Preferred stock dividends 40,000

Earnings available to common shareholders $269,000

Shares outstanding 269,000

Earnings per share $1.00

Statement of Retained Earnings

For the Year Ended December 31, 20XX
Retained earnings, balance, January 1, 20XX $860,000
Add: Earnings available to common shareholders, 20XX 269,000
Deduct: Cash dividends declared and paid in 20XX 150,000

Retained earnings, balance, December 31, 20XX $979,000

Comparative Balance Sheets

For 20XX and 20XW
December 31, 20XX December 31, 20XW
Assets
Current assets:
Cash $120,000 $105,000
Accounts receivable (net) 570,000 558,000
Inventory 510,000 486,000
Prepaid expenses 32,000 64,000

Total current assets 1,232,000 1,213,000

Investments (long-term securities) 100,000 109,000
Plant and equipment 2,200,000 1,800,000
Less: Accumulated depreciation 997,000 767,000

Net plant and equipment 1,203,000 1,033,000

Total assets $2,535,000 $2,355,000

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable $269,000 $237,000
Notes payable 500,000 500,000
Accrued expenses 37,000 58,000

Total current liabilities 806,000 795,000

Long-term liabilities:
Bonds payable, 20XY 150,000 100,000

Total liabilities 956,000 895,000

Shareholders’ equity:
 Preferred stock 100,000 100,000
Common stock 500,000 500,000
Retained earnings 979,000 860,000

Total shareholders’ equity 1,579,000 1,460,000

Total liabilities and shareholders’ equity $2,535,000 $2,355,000

Prepare a statement of cash flows for the Maris Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)

MARIS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating Activities:
Net income $ 309,000
Add items not requiring an outlay of cash:
Amortization expense 230,000

Cash flow from operations 539,000

Increase in accounts receivable -12,000
Increase in inventory -24,000
Decrease in prepaid expenses 32,000
Increase in accounts payable 32,000
Decrease in accrued expenses -21,000

Net Change in non-cash working capital 7,000

Cash provided by operating activities 546,000

Investing activities:
Decrease in investments 9,000
Increase in plant and equipment -400,000

Cash used in Investing activities -391,000

Financing activities:
Increase in bonds payable 50,000
Preferred stock dividends paid -40,000
Common stock dividends paid -150,000

Cash used in financing activities -140,000

Net increase in cash 15,000

Cash, beginning of year 105,000

Cash, end of year $ 120,000

References

Worksheet Learning Objective: 02-04

Explain the importance of
cash flows as identified in
the statement of cash
flows.

Given is the Income Statement for the year ended December 31, 20XX, Statement of Retained Earnings for the year ended
December 31, 20XX and Comparative Balance Sheets for 20XW and 20XX of Maris Corporation:

Maris Corporation
Income Statement
 Year Ended December 31, 20XX
Sales $4,100,000
Cost of goods sold 2,475,000

Gross profits 1,625,000

Selling and administrative expense 570,000
Amortization expense 230,000

Operating income 825,000

Interest expense 46,000

Earnings before taxes 779,000

Taxes 470,000

Earnings after taxes 309,000

Preferred stock dividends 40,000

Earnings available to common shareholders $269,000

Shares outstanding 269,000

Earnings per share $1.00

Statement of Retained Earnings

For the Year Ended December 31, 20XX
Retained earnings, balance, January 1, 20XX $860,000
Add: Earnings available to common shareholders, 20XX 269,000
Deduct: Cash dividends declared and paid in 20XX 150,000

Retained earnings, balance, December 31, 20XX $979,000

Comparative Balance Sheets

For 20XX and 20XW
December 31, 20XX December 31, 20XW
Assets
Current assets:
Cash $120,000 $105,000
Accounts receivable (net) 570,000 558,000
Inventory 510,000 486,000
Prepaid expenses 32,000 64,000

Total current assets 1,232,000 1,213,000

Investments (long-term securities) 100,000 109,000
Plant and equipment 2,200,000 1,800,000
Less: Accumulated depreciation 997,000 767,000

Net plant and equipment 1,203,000 1,033,000

Total assets $2,535,000 $2,355,000

Liabilities and Shareholders’ Equity

Current liabilities:
Accounts payable $269,000 $237,000
Notes payable 500,000 500,000
Accrued expenses 37,000 58,000

Total current liabilities 806,000 795,000

Long-term liabilities:
Bonds payable, 20XY 150,000 100,000

Total liabilities 956,000 895,000

Shareholders’ equity:
Preferred stock 100,000 100,000
Common stock 500,000 500,000
Retained earnings 979,000 860,000

Total shareholders’ equity 1,579,000 1,460,000

Total liabilities and shareholders’ equity $2,535,000 $2,355,000

Prepare a statement of cash flows for the Maris Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)
 MARIS CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating Activities:
Net income $ 309,000
Add items not requiring an outlay of cash:
Amortization expense 230,000

Cash flow from operations 539,000

Increase in accounts receivable -12,000
Increase in inventory -24,000
Decrease in prepaid expenses 32,000
Increase in accounts payable 32,000
Decrease in accrued expenses -21,000

Net Change in non-cash working capital 7,000

Cash provided by operating activities 546,000

Investing activities:
Decrease in investments 9,000
Increase in plant and equipment -400,000

Cash used in Investing activities -391,000

Financing activities:
Increase in bonds payable 50,000
Preferred stock dividends paid -40,000
Common stock dividends paid -150,000

Cash used in financing activities -140,000

Net increase in cash 15,000

Cash, beginning of year 105,000

Cash, end of year $ 120,000

 
Explanation:

No further explanation details are available for this problem.

 
  
 2. Award: 25 out of 25.00 points
 

The following information is provided for the Loofa Corporation.

Balance Sheets
December 31, 20XX December 31, 20XW
Assets
Cash $57,345 $21,845
Accounts receivable 43,690 49,150
Inventory 114,685 98,300
Equipment 101,035 81,920
Less: Accumulated depreciation 24,575 16,385

Net equipment 76,460 65,535

Total assets $292,180 $234,830

Liabilities and Equity

Accounts payable $46,420 $27,305
Taxes payable 5,465 10,920
Common stock 180,220 163,835
Retained earnings 60,075 32,770

Total liabilities and equity $292,180 $234,830

During 20XX, the following occurred:

1. Net income was $54,610.
2. Equipment was purchased for cash, and no equipment was sold.
3. Shares were sold for cash.
4. Dividends were declared and paid.

a. Prepare a statement of cash flows for the Loofa Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)

Loofa Corporation
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating Activities:
Net income $ 54,610
Add items not requiring an outlay of cash:
Amortization expense 8,190

Cash flow from operations 62,800

Changes in non-cash working capital:
Decrease in accounts receivable 5,460
Increase in inventory -16,385
Increase in accounts payable 19,115
Decrease in taxes payable -5,455

Net Change in non-cash working capital 2,735

Cash provided by operating activities 65,535

Investing activities:
Increase in equipment -19,115

Cash used in investing activities -19115

Financing activities:
Issue of common stock 16,385
Common stock dividends paid -27,305

Cash used in financing activities -10,920

Net increase in cash 35,500

Cash, beginning of year 21,845

Cash, end of year $ 57,345

b. Not available in Connect.

References

Worksheet Learning Objective: 02-04

Explain the importance of
cash flows as identified in
the statement of cash
flows.

The following information is provided for the Loofa Corporation.

Balance Sheets
December 31, 20XX December 31, 20XW
Assets
Cash $57,345 $21,845
Accounts receivable 43,690 49,150
Inventory 114,685 98,300
Equipment 101,035 81,920
Less: Accumulated depreciation 24,575 16,385

Net equipment 76,460 65,535

Total assets $292,180 $234,830

Liabilities and Equity

Accounts payable $46,420 $27,305
Taxes payable 5,465 10,920
Common stock 180,220 163,835
Retained earnings 60,075 32,770

Total liabilities and equity $292,180 $234,830

During 20XX, the following occurred:

1. Net income was $54,610.
2. Equipment was purchased for cash, and no equipment was sold.
3. Shares were sold for cash.
4. Dividends were declared and paid.

a. Prepare a statement of cash flows for the Loofa Corporation. (Amounts to be deducted should be indicated with a
minus sign. Omit $ sign in your response.)

Loofa Corporation
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating Activities:
Net income $ 54,610
Add items not requiring an outlay of cash:
Amortization expense 8,190

Cash flow from operations 62,800

Changes in non-cash working capital:
Decrease in accounts receivable 5,460
Increase in inventory -16,385
Increase in accounts payable 19,115
Decrease in taxes payable -5,455

Net Change in non-cash working capital 2,735

Cash provided by operating activities

 65,535

Investing activities:
Increase in equipment -19,115

Cash used in investing activities -19115

Financing activities:
Issue of common stock 16,385
Common stock dividends paid -27,305

Cash used in financing activities -10,920

Net increase in cash 35,500

Cash, beginning of year 21,845

Cash, end of year $ 57,345

b. Not available in Connect.

 
Explanation:

No further explanation details are available for this problem.

 
  
 3. Award: 25 out of 25.00 points  

The following information is provided for the Waif Corporation.

Balance Sheets
December 31, 20XX December 31, 20XW
Assets
Cash $54,500 $17,400
Accounts receivable 64,800 52,200
Inventory 142,200 149,300
Land 60,000 87,000
Plant and equipment 206,000 158,000
Less: Accumulated depreciation 55,000 33,000

Net plant and equipment 151,000 125,000

Total assets $472,500 $430,900

Liabilities and Equity

Accounts payable $27,000 37,000
Bonds payable 118,000 158,000
Common stock 170,000 130,000
Retained earnings 157,500 105,900

Total liabilities and shareholders’ equity $472,500 $430,900

During 20XX, the following occurred:

1. Net income was $91,000.
2. Bonds were retired by issuing new common stock.
3. No equipment was sold.
4. Cash dividends were paid.

a. Prepare a statement of cash flows for the Waif Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)

Waif Corporation
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating activities:
Net income $ 91,000
Add items not requiring an outlay of cash:
Amortization expense 22,000

Cash flow from operations 113,000

Changes in non-cash working capital:
Increase in accounts receivable -12,600
Decrease in inventory 7,100
Decrease in accounts payable -10,000

Net change in non-cash working capital -15,500

Cash provided by operating activities 97,500

Investing activities:
Increase in plant and equipment -48,000
Sale of land 27,000

Cash used in investing activities -21,000

Financing activities:
Retirement of bonds payable -40,000
Issue of common stock 40,000
Common stock dividends paid -39,400

Cash used in financing activities -39,400

Net increase in cash 37,100

 Cash, beginning of year 17,400

Cash, end of year $ 54,500

b. Not available in Connect.

References

Worksheet Learning Objective: 02-04

Explain the importance of
cash flows as identified in
the statement of cash
flows.

The following information is provided for the Waif Corporation.

Balance Sheets
December 31, 20XX December 31, 20XW
Assets
Cash $54,500 $17,400
Accounts receivable 64,800 52,200
Inventory 142,200 149,300
Land 60,000 87,000
Plant and equipment 206,000 158,000
Less: Accumulated depreciation 55,000 33,000

Net plant and equipment 151,000 125,000

Total assets $472,500 $430,900

Liabilities and Equity

Accounts payable $27,000 37,000
Bonds payable 118,000 158,000
Common stock 170,000 130,000
Retained earnings 157,500 105,900

Total liabilities and shareholders’ equity $472,500 $430,900

During 20XX, the following occurred:

1. Net income was $91,000.
2. Bonds were retired by issuing new common stock.
3. No equipment was sold.
4. Cash dividends were paid.

a. Prepare a statement of cash flows for the Waif Corporation. (Amounts to be deducted should be indicated with a minus
sign. Omit $ sign in your response.)

Waif Corporation
Statement of Cash Flows
For the Year Ended December 31, 20XX
Operating activities:
Net income $ 91,000
Add items not requiring an outlay of cash:
Amortization expense 22,000

Cash flow from operations 113,000

Changes in non-cash working capital:
Increase in accounts receivable -12,600
Decrease in inventory 7,100
Decrease in accounts payable -10,000
 Net change in non-cash working capital -15,500

Cash provided by operating activities 97,500

Investing activities:
Increase in plant and equipment -48,000
Sale of land 27,000

Cash used in investing activities -21,000

Financing activities:
Retirement of bonds payable -40,000
Issue of common stock 40,000
Common stock dividends paid -39,400

Cash used in financing activities -39,400

Net increase in cash 37,100

Cash, beginning of year 17,400

Cash, end of year $ 54,500

b. Not available in Connect.

 
Explanation:

No further explanation details are available for this problem.

 
  
 4. Award: 25 out of 25.00 points  

Coastal Pipeline Corp. anticipates cash flows from operating activities of $8 million in 20XX. It will need to spend $1.5 million on
capital investments in order to remain competitive within the industry. Common share dividends are projected at $0.6 million
and preferred dividends at $0.25 million.

a. What is the firm’s projected free cash flow for the year 20XX? (Enter the answer in millions. Round the final answer to 2
decimal places.)

Free cash flow $ 5.65 million

References

Worksheet Learning Objective: 02-04

Explain the importance of
cash flows as identified in
the statement of cash
flows.

Coastal Pipeline Corp. anticipates cash flows from operating activities of $8 million in 20XX. It will need to spend $1.5 million
on capital investments in order to remain competitive within the industry. Common share dividends are projected at $0.6 million
and preferred dividends at $0.25 million.

a. What is the firm’s projected free cash flow for the year 20XX? (Enter the answer in millions. Round the final answer to 2
decimal places.)

Free cash flow $ 5.65 million

 
Explanation:

Coastal Pipeline Corp.

Cash flow from operating activities $8.00 million
− Capital expenditures 1.50
− Common share dividends 0.60
− Preferred share dividends 0.25

Free cash flow $5.65 million