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After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the fol- lowing information: 2008 2009 Cost of goods sold $126,038 $159,143 Cash 18,187 27,478 Depreciation 35,581 40,217 Interest expense 7,735 8,866 Selling and administrative Accounts payable 24,787 32,352 32,143 36,404 Net fixed assets 156,975 191,250 Sales 247,259 301,392 Accounts receivable 12,887 16,717 Notes payable Long-term debt 14,651 15,997 79,235 91,195 27,119 37,216 Inventory New equity 15,600

After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the fol- lowing information: 2008 2009 Cost of goods sold $126,038 $159,143 Cash 18,187 27,478 Depreciation 35,581 40,217 Interest expense 7,735 8,866 Selling and administrative Accounts payable 24,787 32,352 32,143 36,404 Net fixed assets 156,975 191,250 Sales 247,259 301,392 Accounts receivable 12,887 16,717 Notes payable Long-term debt 14,651 15,997 79,235 91,195 27,119 37,216 Inventory New equity 15,600

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cash Flows and Financial Statements at Sunset Boards, Inc. Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the compa- Sunset Boards currently pays out 50 percent of ne income as dividends to Tad and the other original investors and has a 20 percent tax rate. You are Christina's assistant, and she has asked you to prepare the following: ny's financial records are not well maintained. 1. The initial investment in Sunset Boards was provided by An income statement for 2008 and 2009. Tad and his friends and family. Because the initial investment 2. A balance sheet for 2008 and 2009. was relatively small, and the company has made surfboards 3. only for its own store, the investors haven't required detailed 4. financial statements from Tad. But thanks to word of mouth Operating cash flow for each year. Cash flow from assets for 2009. 5. Cash flow to creditors for 2009. among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include open- ing another surfboard store in Hawaii, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. Tad's expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more orga- nized and detailed financial statements than Tad has previ- 6. Cash flow to stockholders for 2009. QUESTIONS How would you describe Sunset Boards' cash flows for 2009? Write a brief discussion. 1. In light of your discussion in the previous question, what do you think about Tad's expansion plans? 2. ously prepared. At the urging of his investors, Tad has hired financial analyst Christina Wolfe to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the fol- lowing information: 2008 2009 $126,038 18,187 Cost of goods sold $159,143 Cash 27,478 Depreciation 35,581 40,217
Transcribed Image Text:Cash Flows and Financial Statements at Sunset Boards, Inc. Sunset Boards is a small company that manufactures and sells surfboards in Malibu. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the compa- Sunset Boards currently pays out 50 percent of ne income as dividends to Tad and the other original investors and has a 20 percent tax rate. You are Christina's assistant, and she has asked you to prepare the following: ny's financial records are not well maintained. 1. The initial investment in Sunset Boards was provided by An income statement for 2008 and 2009. Tad and his friends and family. Because the initial investment 2. A balance sheet for 2008 and 2009. was relatively small, and the company has made surfboards 3. only for its own store, the investors haven't required detailed 4. financial statements from Tad. But thanks to word of mouth Operating cash flow for each year. Cash flow from assets for 2009. 5. Cash flow to creditors for 2009. among professional surfers, sales have picked up recently, and Tad is considering a major expansion. His plans include open- ing another surfboard store in Hawaii, as well as supplying his "sticks" (surfer lingo for boards) to other sellers. Tad's expansion plans require a significant investment, which he plans to finance with a combination of additional funds from outsiders plus some money borrowed from banks. Naturally, the new investors and creditors require more orga- nized and detailed financial statements than Tad has previ- 6. Cash flow to stockholders for 2009. QUESTIONS How would you describe Sunset Boards' cash flows for 2009? Write a brief discussion. 1. In light of your discussion in the previous question, what do you think about Tad's expansion plans? 2. ously prepared. At the urging of his investors, Tad has hired financial analyst Christina Wolfe to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the fol- lowing information: 2008 2009 $126,038 18,187 Cost of goods sold $159,143 Cash 27,478 Depreciation 35,581 40,217
nized and detailed financial statements than Tad has previ- your iscE what do you think ab ously prepared. At the urging of his investors, Tad has hired financial analyst Christina Wolfe to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the fol- lowing information: 2008 2009 Cost of goods sold $126,038 18,187 35,581 7,735 $159,143 Cash 27,478 Depreciation Interest expense 40,217 8,866 32,352 36,404 191,250 301,392 16,717 15,997 91,195 37,216 15,600 Selling and administrative Accounts payable 24,787 32,143 156,975 247,259 12,887 14,651 79,235 Net fixed assets Sales Accounts receivable Notes payable Long-term debt Inventory New equity 27,119
Transcribed Image Text:nized and detailed financial statements than Tad has previ- your iscE what do you think ab ously prepared. At the urging of his investors, Tad has hired financial analyst Christina Wolfe to evaluate the performance of the company over the past year. After rooting through old bank statements, sales receipts, tax returns, and other records, Christina has assembled the fol- lowing information: 2008 2009 Cost of goods sold $126,038 18,187 35,581 7,735 $159,143 Cash 27,478 Depreciation Interest expense 40,217 8,866 32,352 36,404 191,250 301,392 16,717 15,997 91,195 37,216 15,600 Selling and administrative Accounts payable 24,787 32,143 156,975 247,259 12,887 14,651 79,235 Net fixed assets Sales Accounts receivable Notes payable Long-term debt Inventory New equity 27,119
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