Assigned Problem # 3: Cash Flow Statement (10 Points)
Due on Canvas Week # 8: 10/07/2020 on or before 4:30 pm
ATTENTION!! You are to work on your assignments by yourself this is NOT a group project. ALL written work MUST be TYPED. Your work will be graded on content, accuracy, spelling, grammar and professional appearance. Any academic dishonesty will result in zero assigned to ALL parties involved (see page 20 of the syllabus, and FGCU Academic Integrity Guidelines on Canvas Module Week # 1). Also see pages 5 to 6 of syllabus # (d) for further clarifications on assignments.
You have been hired by Lisa Idaho, a successful entrepreneur, to prepare a statement of cash flows for her two-year-old hotel, the Minney Motel. The following are copies of the condensed balance sheets and the income statement of the Minney Motel.
Minney Motel
Condensed Balance Sheets
December 31, 2019 and 2020
| | 2019 | | 2020 |
Cash | $ | 20,000 | $ | 70,000 |
Accounts Receivable | | 200,000 | | 215,000 |
Inventory | | 30,000 | | 35,000 |
Property and Equipment (net) | | 1,400,000 | | 1,500,000 |
Other Assets (Pre-opening Expenses) | | 200,000 | | 100,000 |
| | | | |
Total Assets | | 1,850,000 | | 1,920,000 |
| | | | |
Accounts Payable | | 130,000 | | 190,000 |
Wages Payable | | 10,000 | | 30,000 |
Current Maturities-LTD | | 60,000 | | 50,000 |
Long-Term Debt | | 1,000,000 | | 950,000 |
| | | | |
Total Liabilities | | 1,200,000 | | 1,210,000 |
Owners’ Equity | | 650,000 | | 700,000 |
Total Liabilities and Owner’s Equity | | 1,850,000 | | 1,920,000 |
Minney Motel
Condensed Income Statement
For the Year Ended December 31, 2020
Sales | $ | 2,000,000 |
Cost of Goods Sold | | 300,000 |
Contribution Margin | | 1,700,000 |
Undistributed Operating Expenses | | 1,050,000 |
Income before Fixed Charges | | 650,000 |
Depreciation Expense | | 300,000 |
Amortization of Pre-opening Expenses | | 100,000 |
| | |
Income before Tax | | 250,000 |
Income Tax | | 50,000 |
| | |
Net Income | $ | 200,000 |
Additional Information:
1. Equipment was purchased for $360,000
2. Dividends of $150,000 were declared and paid during 2020
3. Long-term debt of $100,000 was paid during 2020 and $100,000 of long-term debt was re-classified as current at the end of 2020
Step # 1 (Work Sheet # 1): Identify the Operating, Investing and Financing Activities
You have been hired by Lisa Idaho, a successful entrepreneur, to prepare a statement of cash flows for her two-year-old hotel, the Minney Motel. The following are copies of the condensed balance sheets and the income statement of the Minney Motel.
Minney Motel
Condensed Balance Sheets
December 31, 2019 and 2020
| | 2019 | | 2020 |
Cash | $ | 20,000 | $ | 70,000 |
( ) Accounts Receivable - ($ ) | | 200,000 | | 215,000 |
( ) Inventory - ( ) | | 30,000 | | 35,000 |
Property and Equipment (net) | | 1,400,000 | | 1,500,000 |
Other Assets (Pre-opening Expenses) | | 200,000 | | 100,000 |
| | | | |
Total Assets | | 1,850,000 | | 1,920,000 |
| | | | |
( ) Accounts Payable + $ | | 130,000 | | 190,000 |
( ) Wages Payable + $ | | 10,000 | | 30,000 |
Current Maturities-LTD | | 60,000 | | 50,000 |
Long-Term Debt | | 1,000,000 | | 950,000 |
| | | | |
Total Liabilities | | 1,200,000 | | 1,220,000 |
Owners’ Equity | | 650,000 | | 700,000 |
Total Liabilities and Owner’s Equity | | 1,850,000 | | 1,920,000 |
Minney Motel
Condensed Income Statement
For the Year Ended December 31, 2020
Sales | $ | 2,000,000 |
Cost of Goods Sold | | 300,000 |
Contribution Margin | | 1,700,000 |
Undistributed Operating Expenses | | 1,050,000 |
Income before Fixed Charges | | 650,000 |
( ) Depreciation Expense | | 300,000 |
( ) Amortization of Pre-opening Expenses | | 100,000 |
| | |
Income before Tax | | 250,000 |
Income Tax | | 50,000 |
| | |
( ) Net Income | $ | 200,000 |
Additional Information:
1. ( ) Equipment was purchased for $360,000
2. ( ) Dividends of $150,000 were declared and paid during 2020
3. ( ) Long-term debt of $100,000 was paid during 2020 and $100,000 of long-term debt was
re-classified as current at the end of 2020
Required:
Prepare the SCF for the Minney Motel using the indirect method.
Name: (Typed) Date: (Typed)
Minney Motel
Statement of Cash Flows
For the Year Ended December 31, 2020
| | | | | |
Cash Flow from Operating Activities: | | | | | |
| | | | | |
| Net Income | | | $ | |
| | | | | |
| Adjustments to reconcile net income to net cash flow from operating activities: | | | | |
| Depreciation expense | $ | | | |
| Amortization | | | | |
| Accounts Receivable | | | | |
| Inventory | | | | |
| Accounts Payable | | | | |
| Wages Payable | | | |
|
| | | | | |
| Net Cash Flows from Operating Activities | | | |
|
| | | | | |
Cash Flows from Investing Activities: | | | | | |
| Purchase of Equipment | $ | | | |
| Net Cash Flow from Investing Activities | | | | |
| | | | | |
Cash Flows from Financing Activities: | | | | | |
| Payment of Long-Term Debt | $ | | | |
| Payment of Dividends | | | | |
| | | | | |
| Net Cash Flow from Financing Activities | | | | |
| | | | | |
Increase in Cash | During the Period | | | |
|
Cash—Beginning of the Period | | | | | |
| | | | | |
Cash—End of the Period | | | | $ |
|
| | | | | |
NOTE (From Page 8 of the Syllabus):
ALL assignments MUST be typed up using font size 12 and submitted using WORD DOCUMENT FORMAT. DO NOT SUBMIT ASSIGNMENTS IN PDF FORMAT because I CANNOT make written commence on a PDF document when grading assignments. See reminder for submission below.
Reminder Before Submission in the Drop Box on Canvas
1. Remove the NOTE above on the Statement of Cash Flow before submission in the drop box.
2. ALL hand written submission in the drop box will received ZERO (0) POINTS
3. Any violation(s) FGCU Academic Integrity Guidelines will result in zero (0) points given for the assignment and student(s) violations submitted to FGCU Code of Conduct Office.
4. ALL calculations MUST be shown on Step # 1(work sheet # 1) to support your answers on the Statement of Cash Flow. Next attach ONLY Step # 1(work sheet # 1) to the back of the completed Statement of Cash Flow, then submission on Canvas in the drop box provided. Therefore, your submission in the Drop Box on Canvas will consist of two (2) pages (Statement of Cash Flow; and Step # 1(work sheet # 1). Points will be deducted if calculations are NOT shown on Work Sheet # 1.
IF YOU SUBMIT MORE THAN 2 PAGES FOR ASSIGN PROBLEM # 3 I WILL ONLY GRADE THE FIRST 2 PAGES AND IGNORE ALL OTHER PAGE(S).
The completed Statement of Cash Flow MUST have your name typed at the top left side of the completed Statement of Cash Flow, and due date of the assignment on the top right as shown on the completed Statement of Cash Flow above. Writing your name or changing numbers with a pen or pencil will result in five (5) point’s deductions.
5. Points Distributions:
Work sheets 1 = 2 points;
Statement of Cash Flow = 7 points; and
Professional appearance = 1 point (meaning that your work is neatly organized, with
clarity, free from error(s) and follow the guidelines for preparation and submission
in the drop box). NO partial points will be given for Professional Appearance.
Total points for Assignment # 3 = 10 points.