Below are a year-end actual balance sheet for Year 1 and pro forma balance sheet and income statement for Year 2 for the Grow 'n' Glow Manufacturing Company (000 omitted).
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BALANCE SHEET YEAR 1-ACTUAL
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BALANCE SHEET YR 2- PRO FORMA
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Assets
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Assets
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Cash
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$ 9,700
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Cash
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$ 10,670
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Accounts receivable
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15,300
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Accounts receivable
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16,830
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Inventory (incl. $820 18,500
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Inventory (incl. $950 depr.)
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20,350
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Total current assets
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$ 43,500
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Total current assets
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$ 47,850
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Held-to-maturity securities
Net fixed assets
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$ 45,600
32,200
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Held-to-maturity securities Net fixed assets
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$ 45,600
35,000
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Total long-term assets
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$ 77,800
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Total long-term assets
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$ 80,600
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Total assets
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$121,300
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Total assets
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$128,450
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Liabilities Accounts payable
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$ 3,000
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Liabilities Accounts payable
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$ 3,300
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Notes payable
Accrued liabilities
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10,000
6,000
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Notes payable (incl. addtl.
fds. needed)
Accrued liabilities
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13,738
6,600
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Total current liabilities
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$ 19,000
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Total current liabilities
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$ 23,638
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Long-term debt
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35,600
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Long-term debt
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35,600
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Total liabilities
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$ 54,600
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Total liabilities
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$ 59,238
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Equity
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Equity
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Common stock
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$ 10,000
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Common stock
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$ 10,000
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Additional paid-in capital
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30,000
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Additional paid-in capital
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30,000
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Retained earnings
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26,700
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Retained earnings
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29,212
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Total equity
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$ 66,700
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Total equity
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$ 69,212
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Total liabilities & equity
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$121,300
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Total liabilities & equity
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$128,450
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INCOME STATEMENT YR 2-PRO FORMA
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Net sales
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$110,000
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COGS (incl. $3,200 depr.)
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72,820
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Gross profit
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$ 37,180
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Selling expense
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18,040
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Gen & adm exp. (incl. $395 depr.)
12,320
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EBIT
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$ 6,820
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Net interest expense
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1,396
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EBT
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$ 5,424
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Taxes @ 35%
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1,898
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Net income
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$ 3,526
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Dividends
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1,014
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Addition to retained earnings
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$ 2,512
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On the pro forma Statement of Cash flows, what is the company's net cash flow from operating activities, using the indirect method?
- $5,591correct
- $4.641
- $4,771
- $6,541
what does it mean Inventory (incl. $950 depr.) . Inventory (incl. $820 depr)
I do not understand the method of calculating inventory and depreciation
Net income $3,526
- Increase in accounts receivable (1,530)
- Increase in inventory (900)
+ Depreciation expensed 3,595
+ Increase in accounts payable 300
+ Increase in accrued liabilities 600 Net cash flow from operating activities $5,591
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Hend Abdel-Gafar
Accountant
Cairo
Egypt
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