Below are the past two years of financials for Field of Dreams, LLC: INCOME STAT

Question

Below are the past two years of financials for Field of Dreams, LLC: INCOME STATEMENT 2012 Sales Cost of Goods Sold Gross Margin Depreciation Administrative Costs EBIT Interest Pre-tax income$11,000.00 Taxes Net Income Dividends Addition to Retained Earnings 2013 $100,000.00 $137,900.00 $60,000.00 $82,740.00 $40,000.00 $55,160.00 $16,000.00 $19,200.00 $9,000.00 $10,800.00 $15,000.00 $25,160.00 $4,000.00 $4,000.00 $21,160.00 $4,400.00 $8,464.00 $6,600.00 $12,696.00 $0.00 $7,617.60 $6,600.00 $5,078.40

Explanation / Answer

Increase in cash and marketable securities is $ 1,000 as explained below.

Cash flow from operations Net income $            12,696 Add: depreciation $            19,200 $         31,896 Less: Increase in account receivables $         (5,685) Less: Increase in inventory $         (3,000) Add: Increase in accounts payable $            5,000 Cash flow from operations (A) $         28,211 Cash flow from investing activities Purchase of new equipment $       (31,200) Sale of equipment Cash flow from investing activities (B) $       (31,200) Cash flow from financing activities Dividend paid $         (7,618) Debt Issuance $         11,607 Cash flow from financing activities © $            3,989 Total cash flows D (A+B+C) $            1,000 Opening cash balance E $            5,000 Closing cash balance (D+E) $            6,000

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