Question

Below are the past two years of financials for Field of Dreams, LLC: INCOME STATEMENT 2012 Sales Cost of Goods Sold Gross Margin Depreciation Administrative Costs EBIT Interest Pre-tax income$11,000.00 Taxes Net Income Dividends Addition to Retained Earnings 2013 $100,000.00 $137,900.00 $60,000.00 $82,740.00 $40,000.00 $55,160.00 $16,000.00 $19,200.00 $9,000.00 $10,800.00 $15,000.00 $25,160.00 $4,000.00 $4,000.00 $21,160.00 $4,400.00 $8,464.00 $6,600.00 $12,696.00 $0.00 $7,617.60 $6,600.00 $5,078.40

Answer 1

Increase in cash and marketable securities is $ 1,000 as explained below.

Cash flow from operations
Net income	$            12,696
Add: depreciation	$            19,200	$         31,896
Less: Increase in account receivables		$         (5,685)
Less: Increase in inventory		$         (3,000)
Add: Increase in accounts payable		$            5,000
Cash flow from operations (A)		$         28,211
Cash flow from investing activities
Purchase of new equipment		$       (31,200)
Sale of equipment
Cash flow from investing activities (B)		$       (31,200)
Cash flow from financing activities
Dividend paid		$         (7,618)
Debt Issuance		$         11,607
Cash flow from financing activities ©		$            3,989
Total cash flows D (A+B+C)		$            1,000
Opening cash balance E		$            5,000
Closing cash balance (D+E)		$            6,000