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View Full Version : Cash Flow Statement NOT Balancing!


abc4616
Feb 25, 2014, 01:56 PM
Can anyone help?

1) The company acquired $400,000 worth of new PPE in 2007.
2) If common stock was issued by the company in 2007, it was used to acquire PPE.
3) Total coupon payments to bondholders exceeded total interest expense by $50,000 in 2007.
4) If bonds were issued by the company in 2007, they were issued at par.
5) No patents were acquired in 2007.
6) Taxes payable for 2007 were paid in cash on 12/31/2007.

Balance Sheet

December 31,
2006 2007
Assets
Cash $500,000 $690,000
Accounts Receivable $1,500,000 $1,675,000
Inventory $550,000 $700,000
Patent $240,000 $220,000
PPE $3,100,000 $3,175,000
Accumulated Depreciation ($1,200,000) ($1,420,000)
Total Assets $4,690,000 $5,040,000

Liabilities and SE
Accounts Payable $370,000 $300,000
Salaries Payable $120,000 $110,000
Other Liabilities $60,000 $80,000
Bonds $2,500,000 $2,750,000
Total Liabilities $3,050,000 $3,240,000
Common Stock $400,000 $500,000
Retained Earnings $1,240,000 $1,300,000
Total SE $1,640,000 $1,800,000
Total Liabilities and SE $4,690,000 $5,040,000

Income Statement

December 31
2007
Revenues $3,000,000
Gain on equipment sale $10,000
Net Revenue $3,010,000

Expenses
Rent Expense $1,180,000
Salary Expense $620,000
Depreciation Expense $420,000
Amortization Expense $20,000
Interest Expense $450,000
Tax Expense $130,000
Total Expenses $2,820,000
Net Income $190,000

Here is what I have so far:

Statement of Cash Flows
For December 31, 2007

Operations:
Net Income $190,000

Addbacks and Additions:
Depreciation Expense $420,000
Amortization Expense $20,000
Other Liabilities Increase $20,000

Subtractions:
Gain on Sale of Equipment ($10,000)
Excess of Coupon Payments Over Interest Expense ($50,000)
Accounts Receivable Increase ($175,000)
Inventory Increase ($150,000)
Accounts Payable Decrease ($70,000)
Salaries Payable Decrease ($10,000)
Cash Flow from Operations $185,000

Investing:
Sale of Equipment $115,000
Acquisition of PPE ($300,000)
Cash Flow from Investing ($185,000)

Financing:
Issued Bonds at Par $300,000
Paid Dividends ($130,000)
Cash Flow from Financing $170,000