In order to answer the questions, you need to create (1) an income statement and (2) balance sheet using the information below for Klein Manufacturing. (You should probably use Excel to build the sheets.) The relevant information:

Cash: $500

Accounts Receivable: 20% of Sales

Accounts Payable: 20% of Cost of Goods Sold

Notes Payable: $800

Inventory: $2,900

Gross Plant & Equipment: $22,000

Long-term Debt: $4,000

Common Stock: $10,000

Sales: $7,500

Cost of Goods Sold: 40% of Sales

Depreciation Expense: $1,200

Other Operating Expenses: $1,000

Interest Expense: 8% of Long-term Debt

Income Taxes: 25% of Taxable Income

Accumulated depreciation at 2017: $6,000

Since I didnt give you retained earnings, you will need to calculate it. Retained earnings are the amount necessary to balance your balance sheet. Since total liabilities added to total equity must equal total assets, start with total assets, then subtract the liabilities and equity you know.

Questions:

a. What is the firms operating cash flow for 2018? [4 pts.]

b. If gross plant & equipment for 2017 was $20,000, what is the amount of the net capital spending for 2018 (i.e., Dgross fixed assets)? [3 pts.]

c. If Kleins current assets for 2017 were $4,750 and current liabilities for 2017 were $1,750 what is the change in the net working capital from 2017 to 2018? [4 pts.]

d. What is Kleins free cash flow for 2018? [4 pts.]

Pic ver. :

In order to answer the questions, you need to create (1) an income statement and (2) balance sheet using the information below for Klein Manufacturing. (You should probably use Excel to build the sheets.) The relevant information: Cash Accounts Receivable Accounts Payable Notes Payable Inventory Gross Plant & Equipment Long-term Debt Common Stock Sales Cost of Goods Sold Depreciation Expense Other Operating Expenses Interest Expense Income Taxes Accumulated depreciation at 2017 $500 20% of Sales 20% of Cost of Goods Sold $800 $2,900 $22,000 $4,000 $10,000 $7,500 40% of Sales $1,200 $1,000 8% of Long-term Debt 25% of Taxable Income $6,000 Since I didn't give you retained earnings, you will need to calculate it. Retained earnings are the amount necessary to balance your balance sheet. Since total liabilities added to total equity must equal total assets, start with total assets, then subtract the liabilities and equity you know. a. What is the firm's operating cash flow for 2018? [4 pts.] b. If gross plant & equipment for 2017 was $20,000, what is the amount of the net capital spending for 2018 (i.e., Agross fixed assets)? [3 pts.] c. If Klein's current assets for 2017 were $4,750 and current liabilities for 2017 were $1,750 what is the change in the net working capital from 2017 to 2018? [4 pts.] d. What is Klein's free cash flow for 2018? [4 pts.]