MANAGEMENT CASE ASSIGNMENT: Cash Flow Statement Analysis
The following is Crash Zone Corporation's balance sheet at the end of 2013 and its cash flow statement for 2014. Crash Zone manufactures safety equipment for race cars.
The following is the balance sheet for Crash Zone for 2013.
Crash Zone Corp.
Balance Sheets December 31
2013
Assets Current assets
Cash $ 8,250
Accounts receivable - net 7,110
Inventory 14,221
Prepaid assets 1,850
Total current assets 31,431
Land 30,278
Buildings and equipment 222,665
Less: Accumulated depreciation, buildings and equipment (41,115)
Total assets $ 243,259
Liabilities and Stockholders' Equity Current liabilities
Accounts payables $ 13,500
Accrued expenses 4,888
Total current liabilities 18,388
Long-term debt 31,500
Stockholders' equity
Common stock, $10.00 par value 21,552
Paid-in-capital 45,002
Retained earnings 146,872
Less: Treasury stock (20,055)
Total liabilities and stockholders' equity $ 243,259
The following is the statement of cash flows for 2014:
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Crash Zone Corp.
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Cash Flow Statements
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For the year ended December 31, 2014
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Operating Activities
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Net Income
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$ 15,750
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Plus (minus) noncash items:
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Depreciation expense
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6,210
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Plus (minus) changes in current asset and liability accounts
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- Increase in inventory
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(350)
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+ Decrease in prepaid assets
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102
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Decrease in accrued expenses
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(655)
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- Increase in accounts receivable
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(3,178)
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- Decrease in accounts payable
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(1,230)
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Cash provided by operating activities
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$ 16,649
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Investing Activities
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Purchase of equipment
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$ (27,910)
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Proceeds from the sale of land
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6,555
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Cash used by investing activities
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$ (21,355)
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Financing Activities
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Issuance of long-term debt
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$ 8,900
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Issuance of common stock
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23,000
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Cash dividends paid
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(12,200)
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Purchase of treasury stock
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(7,513)
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Cash provided by financing activities
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$ 12,187
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Net cash flow
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$ 7,481
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Additional information:
a. During 2014, 500 shares of common stock were sold to the public.
b. Land was sold during 2014 at an amount equal to its original cost.
Required:
Use the preceding information to derive Crash Zone's balance sheet at the end of 2014.