Nick has also provided the following information: During the year the company raised $274,000 in new long-term debt and retired $238,000 in long-term debt. The
Nick has also provided the following information: During the year the company raised $274,000 in new long-term debt and retired $238,000 in long-term debt. The company also sold $19,000 in new stock and repurchased $79,000 in stock. The company purchased $1,778,000 in fixed assets and sold $514,000 in fixed assets.
Angus has asked you to prepare the financial statement of cash flows and the accounting statement of cash flows. He has also asked you to answer the following questions:
1). Prepare the 2019 financial statement of cash flows with the attached worksheet.
2). Prepare the 2019 accounting statement of cash flows with the attached worksheet.
3). How would you describe Warf Computers' cash flows?
4). Which cash flow statement more accurately describes the cash flows at the company?
5). In light of your previous answers, comment on Nick's expansion plans.
WARF COMPUTERS BALANCE SHEETS ($ IN THOUSANDS) 2018 2019 2018 2019 Current assets Current liabilities Cash and equivalents $ 469 $ 542 Accounts payable $ 582 $ 623 Accounts receivable 802 859 Accrued expenses 481 296 Inventories 795 769 Total current liabilities $1,063 $ 919 Other 94 110 Long-term liabilities Total current assets $2,160 $2,280 Deferred taxes $ 191 $ 257 Main content Fixed assets Long-term debt 1,379 1,415 Property, plant, and equipment $3,815 $4,978 Total long-term liabilities $1,570 $1,672 Less accumulated depreciation 1,310 1,608 Stockholders' equity Net property, plant, and equipment $2,505 $3,370 Preferred stock $ 25 $ 25 Intangible assets and others 851 953 Common stock 151 155 Total fixed assets $3,356 $4,322 Capital surplus 934 949 Accumulated retained earnings 1,924 3,112 Less treasury stock 151 230 Total equity $2,883 $4,011 Total assets $5,516 $6,602 Total liabilities and shareholders' equity $5,516 $6,602 WARF COMPUTERS INCOME STATEMENT ($ IN THOUSANDS) Sales $9,068 Cost of goods sold 5,347 Selling, general, and administrative expense 848 Depreciation 298 Operating income $2,575 Other income 90 EBIT $2,665 Interest expense 164 Pretax income $2,501 Taxes 625 Current: $559 Deferred: $66 Net income $1,876 Dividends $ 688 Retained earnings $1,188 WARF COMPUTERS BALANCE SHEETS ($ IN THOUSANDS) 2018 2019 2018 2019 Current assets Current liabilities Cash and equivalents $ 469 $ 542 Accounts payable $ 582 $ 623 Accounts receivable 802 859 Accrued expenses 481 296 Inventories 795 769 Total current liabilities $1,063 $ 919 Other 94 110 Long-term liabilities Total current assets $2,160 $2,280 Deferred taxes $ 191 $ 257 Main content Fixed assets Long-term debt 1,379 1,415 Property, plant, and equipment $3,815 $4,978 Total long-term liabilities $1,570 $1,672 Less accumulated depreciation 1,310 1,608 Stockholders' equity Net property, plant, and equipment $2,505 $3,370 Preferred stock $ 25 $ 25 Intangible assets and others 851 953 Common stock 151 155 Total fixed assets $3,356 $4,322 Capital surplus 934 949 Accumulated retained earnings 1,924 3,112 Less treasury stock 151 230 Total equity $2,883 $4,011 Total assets $5,516 $6,602 Total liabilities and shareholders' equity $5,516 $6,602 WARF COMPUTERS INCOME STATEMENT ($ IN THOUSANDS) Sales $9,068 Cost of goods sold 5,347 Selling, general, and administrative expense 848 Depreciation 298 Operating income $2,575 Other income 90 EBIT $2,665 Interest expense 164 Pretax income $2,501 Taxes 625 Current: $559 Deferred: $66 Net income $1,876 Dividends $ 688 Retained earnings $1,188
