Question

4. Problem 3.13 (Statement of Cash Flows) eBook You have just been hired as a financial analyst for Barrington Industries. Unfortunately, company headquarters (where all of the firm's records are kept) has been destroyed by fire. So, your first job will be to recreate the firm's cash flow statement for the year just ended. The firm had $100,000 in the bank at the end of the prior year, and its working capital accounts except cash remained constant during the year. It earned $5 million in net income during the year but paid $850,000 in dividends to common shareholders. Throughout the year, the firm purchased $5.5 million of property, plant, and equipment – the majority having a useful life of more than 20 years and falling under the alternative depreciation system. You have just spoken to the firm's accountants and learned that annual depreciation expense for the year is $450,000. The purchase price for the represents additions property, plant, and equipment before depreciation. Finally, you have determined that the only financing done by the firm was to issue long-term debt of $1 million at a 5% interest rate. What was the firm's end-of-year cash balance? Recreate the firm's cash flow statement to arrive at your answer. Write out your answer completely. For example, 5 million should be entered as 5,000,000. Round your answer to the nearest dollar, if necessary.

Answer 1

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- 2x Σ AutoSum : A Insert Delete Format Fill 2 Clear Sort & Filter Editing Find & Select Cells G H I JK cash flow [Compatibility Mode] - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut Calibri 12 AA === Dr Wrap Text General E Copy Paste BI U DA * SF Merge Merge & Center Center $ - % % Format Painter 4:0 .00 8.9 Conditional Format Cell Formatting as Table Styles Clipboard Font Alignment Number Styles E10 - fix A B C D E F 1 2. 3 cash at the beginning of the year 100000 4 changes in net operating working capital except cash 5 Net income 5000000 6 common dividends 850000 7 machinery equipment purchases 5500000 8 depreciation expenses 450000 9 long term debt 1000000 10 interest rate on long term debt 5.00% 11 12 statement of cash flows 13 I. Operating activities formulas 14 net income 5000000 [=B5] 15 depreciation expenses 450000 [=B8] 16 changes in net operating working capital except cash (=B4] 17 net cash provided by (used in) operations 5450000 [=SUM(B14:B16)] 18 19 II. Long term investing activities 20 Additions to PP&E -5500000 [=-B7] Sheet1 Sheet2 MIX_Sheet3 Sheet4 Sheets Sheet6 Sheet7Sheets Sheet Rea ferences BO 120% WA ... * * 05:08 ENG 01-12-2019

- 2x AutoSum - A Insert Delete Format Fill 2 Clear Sort & Find & Filter Select Editing Cells G J K L cash flow [Compatibility Mode] - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut Calibri 12 AA === Dr Wrap Text General E Copy Paste BI U DA * SF Merge Merge & Center Center $ - % % Format Painter 4:0 .00 8.9 Conditional Format Cell Formatting as Table Styles Clipboard Font Alignment Number Styles H25 А в с F 12 statement of cash flows 13 I. Operating activities formulas 14 net income 5000000 [=B5] 15 depreciation expenses 450000 [=B8] 16 changes in net operating working capital except cash (=B4] 17 net cash provided by (used in) operations 5450000 [=SUM(B14:B16)] 18 19 II. Long term investing activities 20 Additions to PP&E -5500000 [--B7] 21 net cash used in investing activities -5500000 (=SUM(B20)] 22 23 III. Financing activities 24 Increase in long term debt 1000000 [=B9] 25 Payment of common dividends -850000 [=-B6] 26 net cash used by financing activities 150000 [=SUM(B24:B25)] 27 28 IV. Summary 29 Net increase(decrease) in cash 30 cash at the beginning of the year 31 cash at the end of year Sheet1 Sheet2 MIX Sheet3 Rea ferences 100000 100000 200000 Sheets Sheet [=B17+B21+B26] [=B3] [=SUM(B29:B30)] Sheet4 Sheets Sheet6 Sheet? 203 120% * DOER 9 ENG 01-12-2019)