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haron Feldman, president of Allied Products, considers $20,000 to be a minimum cash balance for operating purposes




haron Feldman, president of Allied Products, considers $20,000 to be a minimum cash balance for operating purposes. As can be seen from the following statements, only $15,000 in cash was available at the end of 2008. Since the company reported a large net income for the year, and also issued bonds and sold some long-term investments, the sharp decline in cash is puzzling to Ms. Feldman.;Allied Products;Comparative Balance Sheet;December 31, 2008, and 2007;2008;2007;Assets;Current assets;Cash;$;15,000;$;33,000;Accounts receivable;300,000;210,000;Inventory;250,000;196,000;Prepaid expenses;7,000;15,000;Total current assets;572,000;454,000;Long-term investments;90,000;120,000;Plant and equipment;860,000;750,000;Less accumulated depreciation;210,000;190,000;Net plant and equipment;650,000;560,000;Total assets;$;1,312,000;$;1,134,000;Liabilities and Stockholders' Equity;Current liabilities;Accounts payable;$;275,000;$;230,000;Accrued liabilities;8,000;15,000;Total current liabilities;283,000;245,000;Bonds payable;200,000;100,000;Deferred income taxes;42,000;39,000;Total liabilities;525,000;384,000;Stockholders' equity;Common stock;595,000;600,000;Retained earnings;192,000;150,000;Total stockholders' equity;787,000;750,000;Total liabilities and stockholders' equity;$;1,312,000;$;1,134,000;Allied Products;Income Statement;For the Year Ended December 31, 2008;Sales;$;800,000;Cost of goods sold;500,000;Gross margin;300,000;Selling and administrative expenses;214,000;Net operating income;86,000;Non operating items;Gain on sale of investments;$;20,000;Loss on sale of equipment;6,000;14,000;Income before taxes;100,000;Income taxes;30,000;Net income;$;70,000;The following additional information is available for the year 2008;a.;The company sold long-term investments with an original cost of $30,000 for $50,000 during the year.;b.;Equipment that had cost $90,000 and on which there was $40,000 in accumulated depreciation was sold during the year for $44,000.;c.;Cash dividends totaling $28,000 were declared and paid during the year.;d.;The stock of a dissident stockholder was repurchased for cash and retired during the year. No issues of stock were made.;Required;Using the indirect method, prepare a statement of cash flows for 2008.


Paper#24940 | Written in 18-Jul-2015

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