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Category > Management Posted 31 Jan 2018 My Price 9.00

Blankley Company

PROBLEM 14–11 Prepare a Statement of Cash Flows [LO1, LO2]

A comparative balance sheet and an income statement for Blankley Company are given below:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents . . . . . . . . . .

$     39

 

$     81

Accounts receivable . . . . . . . . . . . . . . . .

640

 

588

Inventory . . . . . . . . . . . . . . . . . . . . . . . .

650

 

610

Total current assets . . . . . . . . . . . . . . . . . .

1,329

 

1,279

Property, plant, and equipment . . . . . . . . .

1,505

 

1,484

Less accumulated depreciation . . . . . . .

770

 

651

Net property, plant, and equipment . . . . . .

735

 

833

Total assets . . . . . . . . . . . . . . . . . . . . . . . .

$2,064

 

$2,112

 

 

 

 

 

 

 

 

Accounts payable . . . . . . . . . . . . . . . . . .

$  260

 

$   160

Accrued liabilities . . . . . . . . . . . . . . . . . .

180

 

170

Income taxes payable . . . . . . . . . . . . . . .

77

 

72

Total current liabilities . . . . . . . . . . . . . . . .

517

 

402

Bonds payable . . . . . . . . . . . . . . . . . . . . . .

415

 

600

Total liabilities . . . . . . . . . . . . . . . . . . . . . .

932

 

1,002

Stockholders’ equity:

Common stock . . . . . . . . . . . . . . . . . . . .

 

145

 

 

145

Retained earnings . . . . . . . . . . . . . . . . .

987

 

965

Total stockholders’ equity . . . . . . . . . . . . . .

1,132

 

1,110

Total liabilities and stockholders’ equity . . .

$2,064

 

$2,112

 

 

 

 

 

 

Sales  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,700

Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,540

Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,160

Selling and administrative expenses . . . . . . . . . . . . .

880

Net operating income  . . . . . . . . . . . . . . . . . . . . . . . .

280

Nonoperating items: Gain on sale of equipment . . . .

2

Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . .

282

Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

112

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$  170

 

 

Blankley also provided the following information:

1.       The company sold equipment that had an original cost of $12 million and accumulated depre- ciation of $7 million. The cash proceeds from the sale were $7 million. The gain on the sale was $2 million.

2.       The company did not issue any new bonds during the year.

3.       The company paid a cash dividend during the year.

4.       The company did not complete any common stock transactions during the year.

Required:

1.       Using the indirect method, prepare a statement of cash flows for the year.

2.       Assume that Blankley had sales of $3,900, net income of $190, and net cash provided by operating activities of $160 in the prior year (all numbers are stated in millions). Prepare a memo that summarizes your interpretations of Blankley’s financial performance.

 

 

 

 

Answers

Maurice Tutor
(5)
Status NEW Posted 31 Jan 2018 10:01 PM My Price 9.00

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