This assignment is worth a total of 15 points. You may work in groups of two to three. Make sure to put the names of all students who worked together on this assignment. It is due by the end of class.

Create an income statement and balance sheet for 2018 for Klein Manufacturing from the following information (you may use Excel if that makes it easier): [8 pts.]

Cash $500

Accounts Receivable 25% of Sales

Accounts Payable 20% of Cost of Goods Sold

Notes Payable $800

Inventory $3,000

Gross Plant & Equipment $22,000

Long-term Debt $4,000

Common Stock $10,000

Sales $8,000

Cost of Goods Sold 30% of Sales

Depreciation Expense $1,200

Other Operating Expenses $1,000

Interest Expense 8% of Long-term Debt

Income Taxes 25% of Taxable Income

Since I didnt give you retained earnings, you will need to calculate it. Retained earnings will be the amount necessary to balance your balance sheet. Since you know total liabilities and equity must equal total assets, start with total assets, then subtract the liabilities and equity you know. In addition, accumulated depreciation for 2017 was $6,000.

1. What is the firms operating cash flow for 2018? [2 pts.]

2. If gross plant & equipment for 2017 was $20,000, what is the amount of the net capital spending for 2018 (i.e., gross fixed assets)? [1 pts.]

3. 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? [2 pts.]

4. What is Kleins free cash flow for 2018? [2 pts.]