Problem Application 2: Chapter 16 Cash Flow Statement. 100 points. Use blue ink and present your hand-written solutions in good form (pdf or jpg file, proper underlines and double underlines, dollar signs when appropriate, correct spellings) in the answer sheets provided after the problems. Youneed to submit only the answer sheets with all necessary calculations The 2018 income statement and comparative balance sheet of Sweet Valley, Inc. follow: SWEET VALLEY, INC Income Statement Year Ended December 31, 2018 $ 445,000 Net Sales Revenue 203,200 Cost of Goods Sold 241,800 Gross Profit Operating Expenses: $ 77,400 Salaries Expense 14,500 Depreciation Expense-Plant Assets 10,100 Other Operating Expenses 102,000 Total Operating Expenses Operating Income 139,800 Other Income and (Expenses): Interest Revenue 8,200 Interest Expense (21,100) Total Other Income and (Expenses) (12,900) Net Income Before Income Taxes 126,900 Income Tax Expense 19,400 Net Income $ 107,500 SWEET VALLEY, INC Comparative Balance Sheet December 31, 2018 and 2017 2017 2018 Assets Current Assets S 15400 $ 26,300 Cash 25,100 26 400 Accounts Receivable 91,300 79,300 Merchandise Inventory Long-term Assets 14,000 34.900 Land 108.330 Plant Assets 115.790 (18,630) Accumulated Depreciation-Plant Assets (19.890) $ 235.500 S 262,800 Total Assets Liabilities Current Liabilities S 30,100 Accounts Payable S 35,600 30,800 Accrued Liabilities 28,900 Long-term Liabilities 105,000 Notes Payable 78.000 Total Liabilities 165,900 142.500 Stockholders' Equity Common Stock, no par 64,800 88,200 Retained Earnings 4,800 32,100 Total Stockholders' Equity 69,600 120,300 Total Liabilities and Stockholders' Equity $ 262,800 $ 235,500 Additionally, Sweet Valley purchased land of $20,900 by financing it 100 % with long-term notes payable during 2018. During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asset was disposed of for $0. The cost and the accumulated depreciation of the disposed asset was $13,240. Plant asset was acquired for cash. Requirements I. What is the purpose of the statement of Cash Flows? 2. How will what you learned in this problem help you evaluate an investment? 3. If Sweet Valley plans similar activity for 2019, what is its expected free cash flow? 4. Prepare the 2018 statement of cash flows, formatting operating activities by the indirect method. Class: Name: PROBLEM APPLICATION 2: Statement of Cash Flows. 100 POINTS. Show all necessary calculations. Submit only this 2-page answer sheets. Requirement 1 Requirement 2 Requirement 3 Requirement 4
