Little bit Inc / ACC230 CHAPTER 4 Statement of Cash Flows Page 141 Understanding – Little bit Inc

QUESTION

Little bit
Inc

ACC230
CHAPTER 4 Statement of Cash Flows Page 141 Understanding – Little bit Inc

Complete
Problem 4-5 on p. 141 (Ch. 4). Refer to Exhibit 4.1 on p. 118 (Ch. 4) to create
your statement of cash flows. Submit your completed statement of cash flows and
a 200- to 300-word analysis of the statement 4.5.

The
following comparative balance sheets and income statement are available for
Little Bit Inc. Prepare a statement of cash flows for 2009 using the indirect
method and analyze the statement.

December 31,

2009 2008
Cash
$ 40,000 $ 24,000
Accounts
receivable (net)
48,000 41,500
Inventory
43,000 34,500
Prepaid
expenses
19,000 15,000
Total
Current Assets
$150,000 $ 115,000
Plant and
equipment $
67,000 $ 61,000
Less
accumulated depreciation
(41,000) (23,000)
Plant and
equipment (net) $
26,000 $ 38,000
Long-term
investments
90,000 89,000
Total
Assets
$ 266,000 $ 242,000
Accounts
payable
$ 13,000 $ 11,000
Accrued
liabilities
55,000 71,000
Total
Current Liabilities
$ 68,000 $ 82,000
Long-term
debt
25,000 8,000
Deferred
taxes
4,000 3,500
Total
Liabilities
$ 97,000 $93,500
Common stock
($1 par) and additional paid-in capital
112,000 97,000
Retained
earnings
57,000 51,500
Total
Liabilities and Equity
$266,000 $242,000

Income Statement for 2009
Sales $155,000

Cost of
goods sold 83,000

Gross profit $72,000

Selling and
administrative $45,700

Depreciation 18,000 63,700
Operating
Profit $
8,300
Interest
expense 2,000

Earnings
before tax $
6,300
Tax expense 800

Net income $
5,500

CHAPTER 4
Statement of Cash Flows 141 Understanding

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