Using the financial statements and notes provided below, prepare a cash flow analysis for the Penelope Company for 2019. Penelope Company Income Statement For the Year Ended December 31, 2019 Revenues $2,467,000 Cost of Goods Sold 1,285,000 Gross Margin 1,182,000 Operating Expenses: Selling Expenses 230,000 Administrative Expenses 94,000 Depreciation 15,000 Total Operating Expenses 339,000 Operating Income 843,000 Other Items: Loss on Sale of Patent (11,000) Interest Expense (42,000) Other Items (53,000) Net Income Before Taxes 790,000 Taxes 316,000 Net Income After Taxes $474,000 A review of the notes to the financial statements revealed the following information: Dividends of $210,000 were declared and paid during the year. Selling Expenses include charges of $10,000 for the amortization of trademarks. During 2019 the company sold the only patent that had been reflected on its balance sheet at the beginning of the year. Hint: Consider the beginning balance in the Patent account and the loss on the sale in entering a figure on the cash flow statement. The total depreciation reflected on the income statement amounted to $87,000. Factory-related depreciation of $72,000 is included within cost of goods sold. Note Ignore the last three zeros at the end of each figure in completing this problem. For example, express the net income after taxes of $474,000 as simply +474 in your cash flow statement.
Using the financial statements and notes provided below, prepare a cash flow analysis for the Penelope Company for 2019. Penelope Company Income Statement For the Year Ended December 31, 2019 Revenues $2,467,000 Cost of Goods Sold 1,285,000 Gross Margin 1,182,000 Operating Expenses: Selling Expenses 230,000 Administrative Expenses 94,000 Depreciation 15,000 Total Operating Expenses 339,000 Operating Income 843,000 Other Items: Loss on Sale of Patent (11,000) Interest Expense (42,000) Other Items (53,000) Net Income Before Taxes 790,000 Taxes 316,000 Net Income After Taxes $474,000 A review of the notes to the financial statements revealed the following information: Dividends of $210,000 were declared and paid during the year. Selling Expenses include charges of $10,000 for the amortization of trademarks. During 2019 the company sold the only patent that had been reflected on its balance sheet at the beginning of the year. Hint: Consider the beginning balance in the Patent account and the loss on the sale in entering a figure on the cash flow statement. The total depreciation reflected on the income statement amounted to $87,000. Factory-related depreciation of $72,000 is included within cost of goods sold. Note Ignore the last three zeros at the end of each figure in completing this problem. For example, express the net income after taxes of $474,000 as simply +474 in your cash flow statement.
Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Financial Statement Analysis
Section: Chapter Questions
Problem 14.9BE
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Question
Using the financial statements and notes provided below,
prepare a cash flow analysis for the Penelope Company for 2019.
Penelope Company
Income Statement
For the Year Ended December 31, 2019
Revenues $2,467,000
Cost of Goods Sold 1,285,000
Gross Margin 1,182,000
Operating Expenses:
Selling Expenses 230,000
Administrative Expenses 94,000
Total Operating Expenses 339,000
Operating Income 843,000
Other Items:
Loss on Sale of Patent (11,000)
Interest Expense (42,000)
Other Items (53,000)
Net Income Before Taxes 790,000
Taxes 316,000
Net Income After Taxes $474,000
A review of the notes to the financial statements revealed the
following information:
- Dividends of $210,000 were declared and paid during the year.
- Selling Expenses include charges of $10,000 for the
amortization of trademarks.
- During 2019 the company sold the only patent that had been
reflected on its balance sheet at the beginning of the year.
Hint: Consider the beginning balance in the Patent account and the
loss on the sale in entering a figure on the cash flow statement.
The total depreciation reflected on the income statement
amounted to $87,000. Factory-related depreciation of
$72,000 is included within cost of goods sold.
Note
Ignore the last three zeros at the end of each figure in completing this problem. For example, express the net income after taxes of $474,000 as simply +474 in your cash flow statement.
Transcribed Image Text:Penelope Company
Balance Sheets As of
December 31st
2019
2018
Changes
$ 97,000
114,000
211,000
37,000
459,000
$ 118,000
136,000
148,000
29,000
431,000
$ (21,000)
(22,000)
63,000
8,000
28,000
Cash
Net Accounts Receivable
Inventories
Prepaid Expenses
Current Assets
Buildings & Equipment
990,000
(187,000)
803,000
146,000
182,000
540,000
(100,000)
440,000
82,000
51,000
67,000
76,000
716,000
450,000
(87,000)
363,000
64,000
131,000
(67,000)
(12,000)
479,000
Allowance for Depreciation
Net Plant and Equipment
Less:
Land
Long-term Investments
Patents
Trademarks
64,000
1,195,000
Total Long-Term Assets
Total Assets
$1,654,000 $1,147,000
$507,000
Accounts Payable
Accrued Expenses
Taxes Payable
Customer Deposits
Total Current Liabilities
$111,000
28,000
50,000
77,000
266,000
$ 80,000
86,000
40,000
51,000
257,000
$ 31,000
(58,000)
10,000
26,000
9,000
Long-Term Notes Payable
Bonds Payable
Total Long-term Liabilities
194,000
344,000
538,000
180,000
178,000
358,000
14,000
166,000
180,000
Total Liabilities
$804,000
$615,000
$189,000
Common Stock ($5 Par Value)
Paid-in Capital
Retained Earnings
Treasury Stock
208,000
340,000
377,000
(75,000)
181,000
253,000
113,000
(15,000)
27,000
87,000
264,000
(60,000)
Total Owners' Equity
$850,000
$532,000
$318,000
Total Equities
$1,654,000 $1,147,000
$507,000
Transcribed Image Text:Cash Flow Analysis - Using the data above, prepare Penelope's
cash flow statement for 2019. Ignore the last thee zeros in each
figure.
each item in your response.
Place a + or - sign before
Cash Flow Analysis
In thousands
From Operations:
o Income
o Depreciation of Buildings & Equipment
o Amortization of trademarks
o Loss on sale of patent
o Decrease in accounts receivable (net)
o Increase in inventories
o Increase in prepaid expenses
o Increase in accounts payable
o Decrease in accrued expenses
o Increase in taxes payable
o Increase in customer deposits
o Net From Operations
From Investment Activities:
o Acquisition of buildings & Equipment
o Acquisition of land
o Long-term investments
o Sale of patent
o Net From Investment Activities
From Financing Activities:
o Issuance of long-term notes payable
o Issuance of bonds payable
o Issuance of common stock
o Payment of dividends
o Acquisition of treasury stock
o Net From Financing Activities
Overall Cash Flow
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