Use the balance sheet and income statement below: CLANCY’S DOG BISCUIT CORPORATION Balance Sheet as of December 31, 2021 and 2020 (in millions of dollars) Assets 2021 2020 Liabilities and Equity 2021 2020 Current assets: Current liabilities: Cash and marketable securities $ 10 $ 10 Accrued wages and taxes $ 18 $ 12 Accounts receivable 27 23 Accounts payable 22 20 Inventory 33 28 Notes payable 22 18 Total $ 70 $ 61 Total $ 62 $ 50 Fixed assets: Long-term debt $ 27 $ 29 Gross plant and equipment $ 97 $ 76 Stockholders’ equity: Less: Accumulated depreciation 24 18 Preferred stock (2 million shares) $ 2 $ 2 Net plant and equipment $ 73 $ 58 Common stock and paid-in-surplus (5 million shares) 11 11 Other long-term assets 21 21 Retained earnings 62 48 Total $ 94 $ 79 Total $ 75 $ 61 Total assets $ 164 $ 140 Total liabilities and equity $ 164 $ 140 CLANCY’S DOG BISCUIT CORPORATION Income Statement for Years Ending December 31, 2021 and 2020 (in millions of dollars) 2021 2020 Net sales $ 94 $ 98 Less: Cost of goods sold 48 44 Gross profits $ 46 $ 54 Less: Other operating expenses 8 7 Earnings before interest, taxes depreciation, and amortization (EBITDA) $ 38 $ 47 Less: Accumulated depreciation 6 6 Earnings before interest and taxes (EBIT) $ 32 $ 47 Less: Interest 7 7 Earnings before taxes (EBT) $ 25 $ 34 Less: Taxes 5 7 Net income $ 20 $ 27 Less: Preferred stock dividends $ 1 $ 1 Net income available to common stockholders $ 19 $ 26 Less: Common stock dividends 5 5 Addition to retained earnings $ 14 $ 21 Per (common) share data: Earnings per share (EPS) $ 3.80 $ 5.20 Dividends per share (DPS) $ 1.00 $ 1.00 Book value per share (BVPS) $ 14.60 $ 11.80 Market value (price) per share (MVPS) $ 15.25 $ 15.20 Prepare a statement of cash flows for Clancy’s Dog Biscuit Corporation. (Enter your answers in millions of dollars. Amounts to be deducted should be indicated with a minus sign.)

Use the balance sheet and income statement below: CLANCY’S DOG BISCUIT CORPORATION Balance Sheet as of December 31, 2021 and 2020 (in millions of dollars) Assets 2021 2020 Liabilities and Equity 2021 2020 Current assets: Current liabilities: Cash and marketable securities $ 10 $ 10 Accrued wages and taxes $ 18 $ 12 Accounts receivable 27 23 Accounts payable 22 20 Inventory 33 28 Notes payable 22 18 Total $ 70 $ 61 Total $ 62 $ 50 Fixed assets: Long-term debt $ 27 $ 29 Gross plant and equipment $ 97 $ 76 Stockholders’ equity: Less: Accumulated depreciation 24 18 Preferred stock (2 million shares) $ 2 $ 2 Net plant and equipment $ 73 $ 58 Common stock and paid-in-surplus (5 million shares) 11 11 Other long-term assets 21 21 Retained earnings 62 48 Total $ 94 $ 79 Total $ 75 $ 61 Total assets $ 164 $ 140 Total liabilities and equity $ 164 $ 140 CLANCY’S DOG BISCUIT CORPORATION Income Statement for Years Ending December 31, 2021 and 2020 (in millions of dollars) 2021 2020 Net sales $ 94 $ 98 Less: Cost of goods sold 48 44 Gross profits $ 46 $ 54 Less: Other operating expenses 8 7 Earnings before interest, taxes depreciation, and amortization (EBITDA) $ 38 $ 47 Less: Accumulated depreciation 6 6 Earnings before interest and taxes (EBIT) $ 32 $ 47 Less: Interest 7 7 Earnings before taxes (EBT) $ 25 $ 34 Less: Taxes 5 7 Net income $ 20 $ 27 Less: Preferred stock dividends $ 1 $ 1 Net income available to common stockholders $ 19 $ 26 Less: Common stock dividends 5 5 Addition to retained earnings $ 14 $ 21 Per (common) share data: Earnings per share (EPS) $ 3.80 $ 5.20 Dividends per share (DPS) $ 1.00 $ 1.00 Book value per share (BVPS) $ 14.60 $ 11.80 Market value (price) per share (MVPS) $ 15.25 $ 15.20 Prepare a statement of cash flows for Clancy’s Dog Biscuit Corporation. (Enter your answers in millions of dollars. Amounts to be deducted should be indicated with a minus sign.)

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 103.4C

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Question

Use the balance sheet and income statement below:

CLANCY’S DOG BISCUIT CORPORATION
Balance Sheet as of December 31, 2021 and 2020
(in millions of dollars)
Assets	2021		2020	Liabilities and Equity	2021	2020
Current assets:							Current liabilities:
Cash and marketable securities	$	10		$	10		Accrued wages and taxes	$	18	$	12
Accounts receivable		27			23		Accounts payable		22		20
Inventory		33			28		Notes payable		22		18
Total	$	70		$	61		Total	$	62	$	50
Fixed assets:							Long-term debt	$	27	$	29
Gross plant and equipment	$	97		$	76		Stockholders’ equity:
Less: Accumulated depreciation		24			18		Preferred stock (2 million shares)	$	2	$	2
Net plant and equipment	$	73		$	58		Common stock and paid-in-surplus (5 million shares)		11		11
Other long-term assets		21			21		Retained earnings		62		48
Total	$	94		$	79		Total	$	75	$	61
Total assets	$	164		$	140		Total liabilities and equity	$	164	$	140

CLANCY’S DOG BISCUIT CORPORATION
Income Statement for Years Ending December 31, 2021 and 2020
(in millions of dollars)
	2021		2020
Net sales	$	94		$	98
Less: Cost of goods sold		48			44
Gross profits	$	46		$	54
Less: Other operating expenses		8			7
Earnings before interest, taxes depreciation, and amortization (EBITDA)	$	38		$	47
Less: Accumulated depreciation		6			6
Earnings before interest and taxes (EBIT)	$	32		$	47
Less: Interest		7			7
Earnings before taxes (EBT)	$	25		$	34
Less: Taxes		5			7
Net income	$	20		$	27
Less: Preferred stock dividends	$	1		$	1
Net income available to common stockholders	$	19		$	26
Less: Common stock dividends		5			5
Addition to retained earnings	$	14		$	21
Per (common) share data:
Earnings per share (EPS)	$	3.80		$	5.20
Dividends per share (DPS)	$	1.00		$	1.00
Book value per share (BVPS)	$	14.60		$	11.80
Market value (price) per share (MVPS)	$	15.25		$	15.20

Prepare a statement of cash flows for Clancy’s Dog Biscuit Corporation. (Enter your answers in millions of dollars. Amounts to be deducted should be indicated with a minus sign.)

Expert Solution

Step 1

The statement of cash flows is the one in which cash inflows/outflows are shown related to three activities:

Operating

Investing, and

Financing activities

Under the direct method shows the operating activities of the companies according to the direct method in which adjustments for all the cash paid are made from the cash received during the financial year.

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