Question

MINICASE Cash Flows and Financial Statements at Sunset Boards, Inc. Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, tax returns, and other records, Christina has assembled the is in charge of the design and sale of the surfboards, but his following information: background is in surfing. not business. As a result, the compa- ny's financial records are not well maintained. After rooting through old bank statements, sales receipts, 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 Cost of goods sold 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- ing another surfboard store in Hawaii, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. 2017 2018 $322,742 55,725 81,559 17,980 65,610 $255,605 36,884 72,158 15,687 50.268 26,186 318,345 501,441 26,136 29.712 160,689 50,318 Selling and administrative Accounts payable Net fixed assets Tad's expansion plans require a significant investment, 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 orga Notes payable nized and detailed financial statements than Tad has previously 387.855 611,224 33,901 32,441 175,340 67.674 19,500 Long-term debt prepared. At the urging of his investors. Tad has hired finan nventr cial analyst Christina Wolfe to evaluate the performance of the company over the past year New equity

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Answer 1

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