ACC 230 4.5Little Bit Inc
Create your own statement of cash flows for problem 4.5 on p. 141(ch.4). Include your completed statement of cash flows and a 200-300 word analysis of the statement.
4.5. The following comparative balance sheets and income statement are available for Little Bit Inc.
Prepare a statement of cash flows for 2009 using the indirect method and analyze the statement.
December 31,
2009 2008
Cash $40,000 $24,000
Accounts receivable (net) 48,000 41,500
Inventory 43,000 34,500
Prepaid expenses 19,000 15,000
Total Current Assets $150,000 $115,000
Plant and equipment $67,000 $61,000
Less accumulated depreciation (41,000) (23,000) SOLUTION
Plant and equipment (net) $26,000 $38,000
Long-term investments 90,000 89,000
Total Assets $266,000 $242,000
Accounts Payable $13,000 $11,000
Accrued liabilities 55,000 71,000
Total Current Liabilities $68,000 $82,000
Long-term debt 25,000 8,000
Deferred taxes 4,000 3,500
Total Liabilities $97,000 $93,500
Common stock ($1 par) and additional paid-in capital 112,000 97,000
Retained earnings 57,000 51,500
Total Liabilities and Equity $266,000 $242,000
Income Statement for 2009
Sales $155,000
Cost of goods sold 83,000
Gross profit $72,000
Selling and administrative $45,000
Depreciation 18,000
Operating Profit 63,700
Interest expense $8,300
Earnings before tax 2,000
Tax expense $6,300
Net income $5,500
