• The consolidated balance sheets for the Landon Lumber Company at the beginning and end of 2009 follow. The company bought $50 million worth of fixed assets. The charge for depreciation in 2009 was $10 million. Net income was $33 million, and the company paid out $5 million in dividends.

a. Fill in the amount of the source or use in the appropriate column.

LANDON LUMBER COMPANY: BALANCE SHEET AT BEGINNING

AND END OF 2009 (Millions of Dollars)

CHANGE

-----------------------------

Jan. 1 Dec. 31 Source Use

Cash $ 7 $ 15 ______ ______

Marketable Securities 0 11 ______ ______

Net Receivables 30 22 ______ ______

Inventories 53 75 ______ ______ Total current assets $ 90 $ 123 ______ ______

CHANGE

-----------------------------

Jan. 1 Dec. 31 Source Use

Gross fixed assets 75 125 ______ ______

Less accumulated depreciation 25 35 ______ ______

Net fixed assets $ 50 $ 90 ______ ______

Total assets $ 140 $ 213 ______ ______

Accounts Payable $ 18 $ 15 ______ ______

Notes Payable 3 15 ______ ______

Other Current Liabilities 15 7 ______ ______

Long-term debt 8 24 ______ ______

Common Stock 29 57 ______ ______

Retained Earnings 67 95 ______ ______

Total Liabilities and equity $ 140 $ 213 ______ ______

Notes: Total sources must equal total uses.

Hint: In Part a, you are supposed to comment on how an activity affects a company's cash level.

1. If an activity shows how cash is generated (or it shows where cash is from), the activity is labelled as the "Source of Cash".
2. If an activity represents how cash is spent/used (or it shows where cash goes to), the activity is labelled as the "Use of Cash".