University of London Cash Flow Statement Analysis Worksheet

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The balance sheet for December 31, 2012, December 31, 2011, and the income statement for the year ended December 31, 2012, for Rocket Company follows.

Rocket Company

Balance Sheet

December 31, 2012 and 2011

2012

2011

Assets

Cash

$ 100,000

$ 80,000

Accounts receivable, net

240,000

280,000

Inventory

320,000

400,000

Land

200,000

200,000

Building and equipment

520,000*

460,000

Accumulated depreciation

(340,000)

(280,000)

Total assets

$1.040,000

$1,140,000

Liabilities and Stockholders’ Equity

Accounts payable

$ 120,000

$ 140,000

Income taxes payable

16,000

12,000

Wages payable

20,000

12,000

Current notes payable

200,000**

240,000

Common stock

440,000***

400,000

Retained earnings

244,000

336,000

Total liabilities and stockholders’ equity

$520,000

$1,140,000

* During 2012 cash payments for building and equipment $60,000.

** During 2012 cash paid for retirement of notes payable $40,000.

*** During 2012 cash received from issuance of stock.

Rocket Company

Income Statement

For the Year Ended December 31, 2012

Sales

$2,000,000

Less expenses:

Cost of goods sold

$1,320,000

Selling and administrative expenses

360,000

(includes depreciation of $60,000)

Interest expense

20,000

Total expenses

1,700,000

Income before taxes

$ 300,000

Income tax expense

120,000

Net income

$ 180,000

Note: Cash dividends of $272,000 were paid during 2012.

Required:

a.Prepare the statement of cash flows for 2012.

b. calculate 2012 ending cash balance

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