Problem:
Set forth below are the balance sheets of Fairchild & Johnson Products, Inc. as of December 31, 2009 and 2008, and the company’s income statement and certain additional information for the year ended December 31, 2009.
Prepare in good form a statement of cash flows for Fairchild & Johnson using the “indirect method” for the year ended December 31, 2009. Though not required, students may wish to complete the supplemental worksheet in the Workbook, which may assist with completing the required statement of cash flows.
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Fairchid & Johnson Products,
Balance Sheets
December 31,2009 and
(USS 1, 000s)
Assets
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Inc. 2008
2009
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2008
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Fairchild & Johnson Products, Inc.
Income Statement
Year ended December 31, 2009
(U SS in 000s)
Net sales
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$ 581,250
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Cash and cash equivalents
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$ 75,000
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$ 58,000
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Cost of sales
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465,000
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Accounts receivable, net
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182,000
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168,000
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Gross profit
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116,250
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Inventories (d Lavi, using FIFO cod)
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209,000
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192,000
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Total current assets
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466,000
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418,000
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Selling, general and admin. expense
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52,750
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Research and development expense
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17,000
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Property, plant and equipment, at cost
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654,000
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571,000
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Total operating expenses
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69,750
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Accumulated depreciation
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(191,000)
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(173,000)
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Operating income
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46,500
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Property, plant and equipment, net
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463,000
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398,000
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Interest expense
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22,000
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-rota assets
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$ 929.000
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$ 816.000
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Gain on cisposal of PP&E
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(7,000)
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Liabilities and shareholders' equity:
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Income before income taxes
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31,500
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Accounts payable
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$ 153,000
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$ 138,000
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Accrued income taxes
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35,000
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41,000
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Income tax provision
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10,500
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$ 21,000
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Dividends payable
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33,000
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Net income
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Bank note payable - current portion
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129,000
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122,000
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Retained earningg January 1, 2009
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178,000
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-rota current liabilities
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350,000
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301,000
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Dividends declared December 15, 2009
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(33,000)
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Bank note payable - noncurrent portion
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171,000
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128,000
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Retained earningg December 31, 2009
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$ 166,000
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-rota liabilities
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521,000
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429,000
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Earnings per share
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$ 1.05
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Common stack, par value $10 per share
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220,000
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190,000
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Weighted average shares outstanding
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20,000
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Paid-in capital in excess of par
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22,000
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19,000
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Retained earnings
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166,000
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178,000
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Total shareholders' equity
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408,000
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387,000
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-rota liabilities and shareholderd equity
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$ 929,000
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$ 816,000
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Additional information:
1. During 2009, Fairchild & Johnson (F&J) sold equipment with an original cost of $49,000 and accumulated depreciation of $39,000 for proceeds of $17,000.
2. F&J made no repayments during 2009 under the bank note agreement.
3. On September 1, 2009, F&J issued 3,000 additional shares of common stock at $11 per share.