FIN 200
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Finance 200 Assignment Workbook Week 1 Solution
Week 1 Assignment: Cash Flow Preparation
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Prepare a statement of cash flows for The Niara Corporation.
Follow the general procedures indicated in Table 2–10 on page 38 in your textbook.
You must show your work in order to receive credit.
Niara Corporation
Income Statement
For the Year Ended December 31, 2009
Sales $ 2,200,000
Cost of goods sold 1,300,000
Gross profits 900,000
Selling and administrative expense 420,000
Depreciation expense 150,000
Operating income 330,000
Interest expense 90,000
Earnings before taxes 240,000
Taxes 80,000
Earnings after taxes 160,000
Preferred stock dividends 10,000
Earnings available to common stockholders $ 150,000
Shares outstanding 120,000
Earnings per share $1.25
Statement of Retained Earnings
For the Year Ended December 31, 2009
Retained earnings, balance, January 1, 2009 $ 500,000
Add: Earnings available to common stockholders, 2009 150,000
Deduct: Cash dividends declared and paid in 2009 30,000
Retained earnings, balance, December 31, 2009 $ 620,000
Comparative Balance Sheets
For 2008 and 2009
Year‐End Year‐End
Assets 2008 2009
Current assets:
Cash $ 80,000 $ 135,000
Accounts receivable (net) 310,000 340,000
Inventory 400,000 405,000
Prepaid expenses 55,000 25,000
Total current assets 845,000 905,000
Investments (long‐term securities) 85,000 50,000
Plant and equipment 2,000,000 2,450,000
Less: Accumulated depreciation 1,000,000 1,150,000
Net plant and equipment 1,000,000 1,300,000
Total assets $ 1,930,000 $ 2,255,000
Current liabilities:
Accounts payable $ 275,000 $ 475,000
Notes payable 400,000 400,000
Accrued expenses 65,000 60,000
Total current liabilities 740,000 935,000
Long‐term liabilities:
Bonds payable, 2009 70,000 80,000
Total liabilities 810,000 1,015,000
Stockholders’ equity:
Preferred stock, $100 par value 90,000 90,000
Common stock, $1 par value 120,000 120,000
Capital paid in excess of par 410,000 410,000
Retained earnings 500,000 620,000
Total stockholders’ equity 1,120,000 1,240,000
Total liabilities and stockholders’ equity $ 1,930,000 $ 2,255,000
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