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5.3 Preparing and analyzing a statement of cash flows Allen Company produces roofing supplies and insulation materials for use in home and commercial construction. Although

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5.3 Preparing and analyzing a statement of cash flows Allen Company produces roofing supplies and insulation materials for use in home and commercial construction. Although Allen has been growing, recent lack of production capacity has caused production delays, some stockouts of finished goods, and a shift in the inventory mix from finished goods to raw materials and work in process. Allen Company's comparative balance sheet data and additional information follow (note that 2012 is the year listed first in the presentation): Allen Company comparative balance sheet 2012 2011 Assets Cash Accounts receivable, net $108,000 320,000 $60,0002 235,000 (Continued) -85. 48, sou Cash dividends of $12000 were declared and paid during the year. The company 118 CORPORATE FINANCIAL REPORTING AND 2011 2012 510,000 16 Allen Company comparative halance sheet 450,000 27,000 30,000) Inventory Prepaid expenses Total current assets Investments in affiliates Property, plant, and equipment Less accumulated depreciation Intangible assets 905,000 200,000 1,100,000 (440,000) 35,000 835,000 100,000 950,000 (370,000) 45,000 $1,560,000 $1,800,000 ment reported $80 000 income from equity method investments, $10 000 dividends were received from affiliates, Remaining changes in the account relate to additional -Less efficient equipment with an original cost of $200 000 was sold during the year for The company repurchased the stock of a dissident shareholder during the year and retir the shares. The company paid $70 000 (which was the original issue price of the shares Total assets Liabilities and shareholders' equity Accounts payable Accrued liabilities Total current liabilities Long-term notes payable Contributed capital Retained earnings Total liabilities and shareholders' equity investments $554,000 36,000 $400,000 1542 38,000 2. 590,000 380,000 710,000 120,000 438,000 100,000 750,000 272,000 $1,800,000 $1,560,000 The following additional information is available: The company's stock has no par or stated value. Contributed capital is shown as one amount li.., no distinction between common stock and capital in excess of parl .Net loss for the year was $110 000. The intangible assets have limited lives and were amortized by $10.000 during the year Investment in affiliates represents equity method investments. The income state $40 000. The accumulated depreciation on that equipment was $130 000 declared and distributed a $30 000 stock dividend during the year. 3.10 . No long-term notes were retired during the year. 22 Required (a) Prepare a statement of cash flows for 2012. (b) Discuss the relationship between net income and cash flow from operations and the relationship among cash flow from operating, investing, and financing activities during the two years. Be as specific as the data allow. (c) Identify two conditions in the operating section of the statement which point to the possibility that cash flow from operations might decline next year

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