Question

MINICASE Cash Flows and Financial Statements at Sunset Boards, Inc. company that manufactures and sells After rooting through old bank statements, sales receipts other records, Christina has assembled the surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the compa- ny's financial records are not well maintained. tax returns, and following information: The initial investment in Sunset Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors haven't required detailed Cash financial statements from Tad. But thanks to word of mouth Depreciation among professional surfers, sales have picked up recently, and Interest expense Tad is considering a major expansion. His plans include open-Selling and administrative ing another surfboard store in Hawaii, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. 2017 2018 $255,605 36,884 72,158 15,687 ministrative50,268 26,186 318,345 501,441 26.136 29,712 160,689 50,318 0 Cost of goods sold $322,742 55,725 81,559 17,980 65,610 44,318 387,855 611,224 33,901 32,441 175,340 Accounts payable Tad's expansion plans require a significant investment, Net fixed assets which he plans to finance with a combination of additional Sales funds from outsiders plus some money borrowed from banks. Accounts receivable Naturally, the new investors and creditors require more org Notes payable nized and detailed financial statements than Tad has previously prepared. At the urging of his investors, Tad has hired finan-on cial analyst Christina Wolfe to evaluate the performance of the Long-term debt Inventory New equity 67,674 19,500 company over the past year.

Please answer 4 , 5 and 6 and question 1 and 2

Answer 1

Ans 3

4)

Cash Flow From Assets				2018 Amount ($)
Cash flow from operation
Net Income			123333
Add : Depriciaton			81559
Add : Interest expenses			17980
				222872
Cash flow from fixed Assets
New Asset Purchased		(387855-3183345)		-69510
Cash flow from assets				153362

5)

Cash Flow From Creditor				2018 ( Amount in $)
Increase in long Term debts			(175340-160689)	14651
less: payment of Interest				15687
Cash Flow From Creditor				-1036

6)

Computation of Net Income
sales	611224
less
cost of goods sold	322742
Depriciation	81559
Interest Expenses	17980
selling and administrative expenses	65610
Net Income	123333
Tax @ 21%	14800
Income net of tax	108533
Dividend (125626*40%)	43413.

Cash Flow to Stakeholder				2018 ( Amount in $)
Equity				19500
less: payment of dividend				43413
Cash Flow From Stakeholder				-23913

Q-1 On the basis of cash flow statement there is increase in the cash from the operation which is a good sign for the business and there is negative cash flow in the cash from fixed assets and in overall there is positive cash flow from Assets .There is negative cash flow from creditors and negative cash flow from stakeholder.

Q-2 On the basis of above discussion it shows that the sunset board is on the way of expanding the business due to which there is negative cash flow from fixed assets as new assets were purchased , there is negative cash flow from creditors due to increase in Interest and there is also increase in Long term debts. There is also cash flow in the form of Equity from the stakeholders.