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Student Name:Class:
Problem 14-8
1. and 2.
Calculation of depreciation to add back to Net Income:Accumulated Depreciation, beginning balance $ 70 Correct!Accumulated Depreciation, ending balance $ 85 Correct!Debits to Accumulated Depreciation $ 10 Correct!Credits to Accumulated Depreciation $ 25 Correct!
Changes in noncash balance sheet accounts that impact net income:
Increase in Decrease inAccount Account
Current Assets Balance BalanceAccounts receivable (80) Correct!Inventory 35 Correct!Prepaid expenses (2) Correct!
Current LiabilitiesAccounts Payable 75 Correct!Accrued liabilities (10) Correct!Income taxes payable 8 Correct!
Changes in noncash balance sheet accounts that impact investing and financing:
Increase in Decrease inAccount Account
Noncurrent Assets Balance BalanceProperty, plant, and equipment (80) Correct!Long-term investments 7 Correct!
Liabilities and Stockholders' equityBonds payable 25 Correct!Common stock (40) Correct!
Property, Plant and EquipmentProperty, Plant and Equipment, beginning balance $ 420 Correct!Property, Plant and Equipment, ending balance $ 500 Correct!Debits to Property, Plant and Equipment $ 110 Correct!Credits to Property, Plant and Equipment $ 30 Correct!
Retained EarningsRetained Earnings, beginning balance $ 92 Correct!Retained Earnings, ending balance $ 132 Correct!Debits to Retained Earnings $ 16 Correct!Credits to Retained Earnings $ 56 Correct!
Student Name:Class:
Problem 14-8
EATON COMPANYStatement of Cash Flows
For the Year Ended December 31, 2011
Operating activities:Net income $ 56 Adjustments needed to convert net income to cash basis:
Net cash provided by operating activities
Investing activities:
Net cash used for investing activities
Financing activities:
Net cash used in financing activitiesNet decrease in cashCash balance, January 1, 2011Cash balance, December 31, 2011
Given Data P14-8:
EATON COMPANYComparative Balance Sheet
December 31, 2011, and 2010
2011 2010AssetsCash $ 4 $ 11 Accounts receivable 310 230 Inventory 160 195 Prepaid expenses 8 6 Total current assets 482 442 Property, Plant, and equipment 500 420 Less accumulated depreciation 85 70 Net property, plant, and equipment 415 350 Long-term investments 31 38 Total assets $ 928 $ 830
Liabilities and Stockholders' EquityAccounts payable $ 300 $ 225 Accrued liabilities 70 80 Income taxes payable 71 63 Total current liabilities 441 368 Bonds payable 195 170 Total liabilities 636 538 Common stock 160 200 Retained earnings 132 92 Total stockholders' equity 292 292 Total liabilities and stockholders' equity $ 928 $ 830
EATON COMPANYIncome Statement
For the Year Ended December 31, 2011
Sales $ 750 Cost of goods sold 450 Gross margin 300 Selling and administrative expenses 223 Net operating income 77 Nonoperating items: Gain on sale of investments $ 5 Loss on sale of equipment 2 3 Income before taxes 80 Income taxes 24 Net income $ 56
Equipment cost $ 30 Equipment selling price $ 18 Accumulated depreciation of equipment $ 10 Long-term investment purchase $ 7 Long-term investment sale $ 12 Paid cash dividend ?
Stock repurchase $ 40
Student Name:Class:
Problem 14-14
1. and 2.
Calculation of depreciation to add back to Net Income:Accumulated Depreciation, beginning balanceAccumulated Depreciation, ending balanceDebits to Accumulated DepreciationCredits to Accumulated Depreciation
Changes in noncash balance sheet accounts that impact net income:
Increase in Decrease inAccount Account
Current Assets Balance BalanceAccounts receivableInventoryPrepaid expenses
Current LiabilitiesAccounts PayableAccrued liabilitiesIncome taxes payable
Changes in noncash balance sheet accounts that impact investing and financing:
Increase in Decrease inAccount Account
Noncurrent Assets Balance BalanceProperty, plant, and equipmentLong-term investments
Liabilities and Stockholders' equityBonds payableCommon stock
Property, Plant and EquipmentProperty, Plant and Equipment, beginning balanceProperty, Plant and Equipment, ending balanceDebits to Property, Plant and EquipmentCredits to Property, Plant and Equipment
Retained EarningsRetained Earnings, beginning balanceRetained Earnings, ending balanceDebits to Retained EarningsCredits to Retained Earnings
Student Name:Class:
Problem 14-14
ALLIED COMPANYStatement of Cash Flows
For the Year Ended December 31, 2011
Operating activities:Net incomeAdjustments needed to convert net income to a cash basis:
Net cash provided by operating activities
Investing activities:
Net cash used for investing activities
Financing activities:
Net cash provided by financing activitiesNet decrease in cashCash balance, Beginning of yearCash balance, End of year
3. Free cash flow computationNet cash provided by operating activities Capital expenditures DividendsFree cash flow
Given Data P14-14:
Minimum cash balance $ 20,000
ALLIED COMPANYComparative Balance Sheet
December 31, 2011, and 2010
2011 2010Assets
Current assets: Cash $ 15,000 $ 33,000 Accounts receivable 200,000 210,000 Inventory 250,000 196,000 Prepaid expenses 7,000 15,000 Total current assets 472,000 454,000 Long-term investments 90,000 120,000 Plant and equipment 860,000 750,000 Less accumulated depreciation 210,000 190,000 Net plant and equipment 650,000 560,000 Total assets $ 1,212,000 $ 1,134,000
Liabilities and Stockholders' EquityCurrent liabilities: Accounts payable $ 175,000 $ 230,000 Accrued liabilities $ 8,000 $ 15,000 Income taxes payable 42,000 39,000 Total current liabilities 225,000 284,000 Bonds payable 200,000 100,000 Total liabilities 425,000 384,000 Stockholders' equity: Common stock 595,000 600,000 Retained earnings 192,000 150,000 Total stockholders' equity 787,000 750,000 Total liabilities and stockholders' equity $ 1,212,000 $ 1,134,000
Given Data P14-14:
ALLIED COMPANYIncome Statement
For the Year Ended December 31, 2011
Sales $ 800,000 Cost of goods sold 500,000 Gross margin 300,000 Selling and administrative expenses 214,000 Net operating income 86,000 Nonoperating items: Gain on sale of investments $ 20,000 Loss on sales of equipment 6,000 14,000 Income before taxes 100,000 Income taxes 30,000 Net income $ 70,000
Additional information:
Long-term investment cost $ 30,000 Long-term investment sale $ 50,000 Equipment cost $ 90,000 Equipment accumulated depreciation $ 40,000 Equipment selling price $ 44,000 Dividends declared and paid ? Stock was repurchased for cash ?
Student Name:Class:
Problem 14A-5
EATON COMPANYAdjusted Income Statement
For the Year Ended December 31, 2011
Sales Adjustments to a cash basis:
Cost of goods sold Adjustments to a cash basis:
Selling and administrative expenses Adjustments to a cash basis:
Income taxes Adjustments to a cash basis:
Net cash provided by operating activities
EATON COMPANYStatement of Cash Flows
For the Year Ended December 31, 2011
Operating activities:Cash received from customersLess cash disbursements for:
Total cash disbursementsNet cash provided by operating activities
Investing activities:
Net cash used in investing activities
Financing activities:
Net cash used in financing activitiesNet decrease in cashCash balance, beginning
Cash balance, ending
Given Data P14A-5:
EATON COMPANYComparative Balance Sheet
December 31, 2011, and 2010
2011 2010AssetsCash $ 4 $ 11 Accounts receivable 310 230 Inventory 160 195 Prepaid expenses 8 6 Total current assets 482 442 Property, Plant, and equipment 500 420 Less accumulated depreciation 85 70 Net property, plant, and equipment 415 350 Long-term investments 31 38 Total assets $ 928 $ 830
Liabilities and Stockholders' EquityAccounts payable $ 300 $ 225 Accrued liabilities 70 80 Income taxes payable 71 63 Total current liabilities 441 368 Bonds payable 195 170 Total liabilities 636 538 Common stock 160 200 Retained earnings 132 92 Total stockholders' equity 292 292 Total liabilities and stockholders' equity $ 928 $ 830
EATON COMPANYIncome Statement
For the Year Ended December 31, 2011
Sales $ 750 Cost of goods sold 450 Gross margin 300 Selling and administrative expenses 223 Net operating income 77 Nonoperating items: Gain on sale of investments $ 5 Loss on sale of equipment 2 3 Income before taxes 80 Income taxes 24 Net income $ 56
Equipment cost $ 30 Equipment selling price $ 18 Accumulated depreciation of equipment $ 10 Long-term investment purchase $ 7 Long-term investment sale $ 12 Paid cash dividend ?
Stock repurchase $ 40