Mgmt 200 Assignment Soln 4-19-10

Mgmt 200 Assignment Soln 4-19-10 - 10 Increase in prepaid...

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Management 200 – Introductory Financial Accounting– Spring 2010 Krannert School of Management - Purdue University Solutions to class assignment for April 19, 2010 Problem 12-1 Statement of Cash Flows – Indirect Method 1. Changes in account balances and explanations (in thousands of dollars): Net Change Dr. (Cr.) Explanation Cash (2) Accounts receivable 5 Inventory (10) Prepaid rent 3 Land 0 Plant and equipment 100 Purchase Accumulated depreciation (35) Depreciation expense Accounts payable (2) Income taxes payable 2 Short-term notes payable (10) Issuance Bonds payable 25 Retirement Common stock (50) Issuance Retained earnings (26 ) Net income Total 0
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2. Statement of cash flows: CHRISMAN COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2008 (IN THOUSANDS OF DOLLARS) Cash Flows from Operating Activities Net income $ 26 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense 35 Increase in accounts receivable (5) Decrease in inventory
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Unformatted text preview: 10 Increase in prepaid rent (3) Increase in accounts payable 2 Decrease in income taxes payable (2 ) Net cash provided by operating activities $ 63 Cash Flows from Investing Activities Acquisition of plant and equipment $ (100 ) Cash Flows from Financing Activities Retirement of bonds payable $ (25) Issuance of short-term notes payable 10 Issuance of common stock 50 Net cash provided by financing activities $ 35 Net increase (decrease) in cash $ (2) Cash balance, December 31, 2007 10 Cash balance, December 31, 2008 $ 8 2. No, Chrisman did not generate enough cash from its operations to pay for its investing activities. Cash flow from operating activities amounted to only $63,000, while the company spent $100,000 to acquire plant and equipment. The additional cash needed to finance the acquisition was raised by issuing a note for $10,000 and issuing common stock for $50,000....
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This note was uploaded on 05/25/2010 for the course MGMT 200 taught by Professor Greigg during the Spring '08 term at Purdue University-West Lafayette.

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Mgmt 200 Assignment Soln 4-19-10 - 10 Increase in prepaid...

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