80.2K

Verified Solution

Link Copied!

Exercise 4-12 Construction of cash flow statement (L04-5) Holmes Company reported the following balance sheets at December 31, 20X2 and 20X1: ($ in millions) Cash Accounts receivable Inventory Fixed assets Accumulated depreciation Total assets December 31, 20x2 20x1 $ 45 $ 40 170 175 250 230 500 400 (150) (120) $ 815 $ 725 Accounts payable Long-term debt Common stock Retained earnings Treasury stock Total liabilities and stockholders' equity $ 100 455 50 280 (70 $ 815 $80 425 se 200 130 $ 725 Its income statement for 20X2 was as follows: (s in millions) Sales Cost of sales Depreciation Other operating expenses Income before taxes Income taxes Net Income $1,000 (670) (30) (100) 200 (42) $ 158 Additional information: During 20X2. Holmes had the following transactions a. Declared and paid a common dividend of 578 million b. Purchased additional fixed assets, but did not sell any Issued $30 million of new debti d. Paid interest on all its debt, and included the interest in Other operating expenses Required: Prepare a cash flow statement for Holmes for 20x2, using the indirect method to present the operating section. For your calculations, It may be helpful to use the worksheet approach described in the chapter appendix to construct the cash flow statement. (Net cash outflows and amounts to be deducted should be indicated by a minus sign. Enter your answers in millions.) Holmes Company Statement of Cash Flows For the year ended December 31, 20X2 (5 in millions) Operating activities Net Income 130 Change in working capital Decrease in accounts receivable Increase in Inventory Increase in accounts payable 130 Cash flow from operating activities Investing activities Stock repurchase Cash flow from investing activities Financing activities Issuance of debt Dividends paid Stock repurchase Cash flow from financing activities Not change in cash Cash at beginning of year Cash at end of year 0 130 $

Answer & Explanation Solved by verified expert

See Answer