Question

Refer to the following financial statements for Crosby Corporation: CROSBY CORPORATION Income Statement For the Year Ended December 31, 20X2 Sales Cost of goods sold 2,200,000 1,300,000 900,000 420,000 150,000 330,000 90,000 240,000 80,000 160,000 10,000 150,000 120,000 1.25 Gross profit Selling and administrative expense Depreciation expense Operating income Interest expense Earnings before taxes Taxes Earnings after taxes Preferred stock dividends Earnings available to common stockholders Shares outstanding Earnings per share Statement of Retained Earnings For the Year Ended December 31, 20X2 $500,000 150,000 50,000 $600,000 Retained earnings, balance, January 1, 20X2 Add: Earnings available to common stockholders, 20X2 Deduct: Cash dividends declared and paid in 20X2 Retained earnings, balance, December 31, 20X2

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Answer:

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Crosby Corporation
Statement of Cash Flows
For the Year Ended December 31, 20x2
Cash flows from operating activities:
Net income (earnings after taxes)		160000
Adjustments to determine cash
flow from operating activities:
Add back depreciation	150000
Increase in accounts receivable (350,000-300,000)	-50000
Increase in inventory (430,000-410,000)	-20000
Decrease in prepaid expenses (50,000-30,000)	20000
Increase in accounts payable (440,000-250,000)	190000
Decrease in accrued expenses (50,000-70,00)	-20000
Total adjustments		270000
Net cash flows from operating
activities		430000
Cash flows from investing activities:
Decrease in investments (80,000-70,000)	10000
Increase in plant and equipment (2400,000-2000,000)	-400000
Net cash flows from investing activities		-390000
Cash flows from financing activities:
Increase in bonds payable (120,000-70,000)	50000
Preferred stock dividends paid	-10000
Common stock dividends paid	-50000
Net cash flows from financing		-10000
Net increase (decrease) in cash flows		30000

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Book value per share

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