CHAPTER CASE

Cash Flows and Financial Statements at Sunset Boards, Inc.

unset Boards is a small compary that manutactures

Sand sells surfboards in Mallbu. Tad Marks, the

founder of the company, is in charge of the design and

sale of the surfboarcs, but his background is in surfing.

not business. As a result, the company's financial

records are not well maintained.

The initial Investment in Sunset Boards was pro$-$

vided by Tad and his friends and family. Because the ini$-$

tial imestment was relatively small, and the company

has made surfboards only for its own store, the investors

haven't required detailed financial statements from Tad.

But thanks to word of mouth among protessional surf$*$

ers, sales have picked up recently, and Tad is consider

Ing a major expansion. His plans include opening

another surtboard store in Howail, as well as supplying

his "sticks" $($surfer lingo for boards$)$ to other sellers.

Tad's expansion plans require a significant investr

ment, which he plans to france with a combination of

additional funds from outsiders phes some money bor$-$

rowed from banks. Naturely, the rewimestors and cred

itors require more organized and detalled financal

statements than Tad has previously prepered. At the wig

ing of his investors, Tad has hired financial analyst Siotra

Reld to cvalume the performance of the company owert

the past yeat,

After rooling through old bank statemonts, sales

recelpts, tax returns, and other records, Sierra has

assembled the following intormation:

QUESTIONS

How would you describe Sunset Boards'ts cast!

fows for $2022?$ Write a brief clacusilon.

Sunset Eoards currently pays out $50$ percent of

net income as dividends to Tad and the other original

investors and has a $21$ percent tax rate. You are

Sierrais assistant, and he has asked you to prepare the

tollowite:

At income statement for $2021$ and $2022.$

A balingee streyt for $2021$ and $2022.$

Duerating cash flow for cach year.

Casn flow from assets for $2022.$

Casn llow to creditors for $2022.$

Cash Hiow to stocknolders for $2022.$

In igmt at your discusinon in the previous question.

whe eto you think absout Tad's excarsion plans?

Please solve questions $3-6$ on the right and $1-2$ on the bottom. Thabk you