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Cash Flows and Financial Statements at Sunset Boards, Inc. Sunset Boards currently pays out 50 percent of net income as divid
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1. Preparing Income statement for 2010 and 2011:-

Particular 2010 (Amount in $) 2011 (Amount in $)
Sales 321,437 391,810
Less: COGS (163,849) (206,886)
Gross Profit 157,588 184,924
Less: Selling & Admin Exp (32,223) (42,058)
Less: Depreciation (46,255) (52,282)
Earning Before Interest and Taxes(EBIT) 79,110 90,584
Less: Interest Expenses (10,056) (11,526)
Earning before Tax(EBT) 69,054 79058
Less: Tax@20% (13,811) (15,812)
Net Income 55,243 63,246
Dividends Paid 27622 31,623
Transfer to Retained earnings 27621 31,623

b). Preparing the Balance Sheet for 2010 & 2011:

Particular 2010 (Amount in $) 2011 (Amount in $)
ASSETS
Cash 23,643 35,721
Accounts Receivables 16,753 21,732
Inventory 32,255 43,381
Net Fixed Assets 204,068 248,625
Total assets 276,719 349,459
LIABILITIES & EQUITIES
Accounts Payable 41,786 47,325
Notes Payable 19,046 20,796
Long Term Debt 103,006 116,334
Equity (Balancing Fig for 2010) 85,260 105760*
Retained Earnings 27,621 59,244**
Total Liabilities & Equities 276,719 349,459

*- Equity for 2011 = 85260+20500 ;= $ 105760

** Retained earnings for 2011 = 27,621+31,623 ;= $59,244

c). Preparing Operating Cash flow for 2010 & 2011:-

Particular 2010 (Amount in $) 2011 (Amount in $)
Net Income 55,243 63,246
Add: Depreciation 46255 52282
Add: Increase in Accounts Payable 41,786 5539
Add: Increase in Notes Payable 19,046 1750
Less: Increase in Accounts Receivables (16,753) (4979)
Less: Increase in Inventory (32,255) (11126)
Operating Cash Flow 113322 106712

Note- Since, 2010 is initial year Change in working capital from 0.

d). Preparing Cash Flow from Assets for 2011:-

Cash Flow from Assets = Operating Cash Flow - Capital Expenditure

= 31,623 - 96839*

= -$ 65,216

*- Capital Expenditure = Closing Fixed assets - Opening Fixed Assets + Depreciation

= 248625 - 204068 + 52282

= $ 96,839

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