KRAMER CORPORATION

INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31 , 2019
SALES 2,000,000
COST OF GOOD SOLD 1,500,000
GROSS PROFIT 500,000
SELLING AND ADMINISTRATIVE EXPENSE 270,000
DEPRECIATION EXPENSE 50,000
OPERATING PROFIT(EBIT) 180,000
INTEREST EXPENSE 20,000
EARNING BEFORE TAXES (EBT ) 160,000
TAXES 49,500
EARNINGS AFTER TAXES 110,500
PREFERRED STOCKS DIVIDENDS 10500
EARNINGS AVAILABLE TO COMMON STOCKHOLDERS 100,000
SHARES OUTSTANDINGS 100,000
EARNING PER SHARE $1

FOR THE YEAR ENDED DECEMBER 2019

STATEMENT OF RETAINED EARNINGS

RETAINED EARNINGS , BALANCE JANUARY 1 , 2019 250,000

ADD: EARNINGS AVAILABLE TO COMMON STOCKHOLDERS 100,000
DEDUCT : CASH DIVIDENDS DECLARED IN 2004 50,000

RETAINED EARNINGS BALANCE DECEMBER 31 , 2019 $300,000

KRAMER CORPORATION
COMPARATIVE BALANCE SHEETS

YEAR END 2018 YEAR END 2019

ASSETS
CURRENT ASSETS
CASH 30,000 40,000
MARKETABLE SECURITIES 10,000 10,000
ACCOUNTS RECEIVABLE 170,000 200,000
INVENTORY 160,000 180,000
PREPAID EXPENSES 30,000 20,000

TOTAL CURRENT ASSETS 400,000 450,000

INVESTMENTS(LONG TERM) 20,000 50,000

PLANT AND EQUIPMENT 1,000,000 1,100,000
LESS ACCUMULATED DEPRECIATION 550,000 600,000
NET PLANT AND EQUIPMENT 450,000 500,000

TOTAL ASSETS $870,000 $1,000,000

LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
ACCOUNTS PAYABLE 45,000 80,000
NOTES PAYABLE 100,000 100,000
ACCRUED EXPENSES 35,000 30,000

TOTAL CURRENT LIABILITIES 180,000 210,000

LONG TERM LIABILITIES

BONDS PAYABLE 40,000 90,000

TOTAL LIABILITIES 220,000 300,000

STOCKHOLDERS EQUITY
PREFERRED STOCK 100 PER VA 50,000 50,000
COMMON STOCK 1 PAR VALUE 100,000 100,000
CAPITAL PAID IN EXCESS 250,000 250,000
RETAINED EARNINGS 250,000 300,000

TOTAL STYOCKHOLDERS EQUITY 650,000 700,000

TOTAL LIABILITIES AND STOCKHOLDERS EQ $870,000 $1,000,000

EAR END 2019
 NET INCOME earnings after taxes
PLUS
DEPRECIATION
MINUS
INCREASE IN CURRENT ASSETS
PLUS
DECREASE IN CURRENT ASSETS
PLUS
INCREASE IN CURRENT LIABILITIES
MINUS
DECREASE IN CURRENT LIABILITIES

EQUALS
NET CASH FLOW FROM OPERATING ACTIVITIES

Statement of Cash Flows:

Conceps behind the statement of cash flows

Cash inflows
1.Cash flows from operating activities
Generation of funds in normal
operations

+
Sale of plant and equipment.
Liquidation of long-term investment 2. Cash flows from investing activities

+
Sale of bonds, common stock,
3. Cash flows from financing activities
prefferred stock, and other securities
 3. Cash flows from financing activities

equals

Add items 1,2,3 together to arrive at

Net increase (decrese) in cash

CASH FLOWS FROM INVESTING ACTIVITIES

INCREASE INVESTMENTS USE OF FUNDS DECREASE THE CASH BALANCE

DECREASE INVESTMENTS SOURCE OF FUNDS INCREASE THE CASH BALANCE

CASH FLOWS FROM FINANCING ACTIVITIES

PAYMENT DIVIDENDS USE OF FUNDS DECREASE THE CASH BALANCE

INCREASE OF BONDS SOURCE OF FUNDS INCREASE THE CASH BALANCE
PAYABLE
 REASONS
START WITH NET INCOME

RECOGNIZE THAT DEPRECIATION IS A NONCASH DEDUCTION IN

COMPUTING NET INCOME AND SHOULD BE ADDED BACK TO NET
INCOME TO INCREASE THE CASH BALANCE
AR 2018
RECOGNIZE THAT INCREASES IN CURRENT ASSETS ARE A USE FUNDS 200,000
AND REDUCE CASH BALANCE (INDIRECTLY)

RECOGNIZE THAT DECREASES IN CURRENT ASSETS ARE A SOURCE

OF FUNDS AND INCREASE THE CASH BALANCE 300,000

RECOGNIZE THAT INCREASES IN CURRENT LIABILITIES ARE A SOURCE 200,000

AND INCREASES THE CASH BALANCE

RECOGNIZE THAT DECREASES IN CURRENT LIABILITIES ARE A USE OF 300,000

FUNDS AND DECREASE THE CASH BALANCE

sh flows

Cash outflows
ting activities Expenditure of funds in
normal operations

Purchase of plant and equipment.

g activities Long-term investment

Retirement or repurchase of bonds,

activities common stock,
preferred stock, and other securities.
Payment of cash dividends
 Retirement or repurchase of bonds,
activities common stock,
preferred stock, and other securities.
Payment of cash dividends

rive at
h

ECREASE THE CASH BALANCE

NCREASE THE CASH BALANCE

ECREASE THE CASH BALANCE

NCREASE THE CASH BALANCE
AR 2019
300,000 - 100,000 DEDUCTED

200,000 100,000 ADDED

300,000 100,000 ADDED

200,000 - 100,000 DEDUCTED

KRAMER CORPORATION

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2004

CASH FLOWS FROM OPERATING ACTIVITIES :

NET INCOME ( EARNING AFTER TAXES ) 160,000

ADJUSTMENTS TO DETERMINE CASH FLOW FROM
OPERATING ACTIVITIES :

ADD BACK DEPRECIATION 150,000

INCREASE IN ACCOUNTS RECEIVABLE -50,000
INCREASE IN INVENTORY -20,000
DECREASE IN PREPAID EXPENSES 20,000
INCREASE IN ACCOUNTS PAYABLE 190,000
DECREASE IN ACCRUED EXPENSES -20,000

TOTAL ADJUSTMENTS 270,000

NET CASH FLOWS FROM OPERATING ACTIVITIES 430,000

CASH FLOWS FROM INVESTING ACTIVITIES

DECREASE IN INVESTMENTS (LONG TERM SECURITIES) 10,000
INCREASE IN PLANT AND EQUIPMENT -400,000

NET CASH FLOWS FROM INVESTING ACTIVITIES -390,000

CASH FLOWS FROM FINANCING ACTIVITIES

INCREASE IN BONDS PAYABLE 50,000

PREFERED STOCK DIVIDENS PAID -10,000
COMMON STOCK DIVIDENDS PAID -50,000

NET CASH FLOWS FROM FINANCING ACTIVITIES -10,000

NET INCREASE ( DECREASE ) IN CASH FLOWS 30,000

CIA SHERWIN WILLIAMS CORPORATION

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2004

CASH FLOWS FROM OPERATING ACTIVITIES :

NET INCOME ( EARNING AFTER TAXES ) 160,000

ADJUSTMENTS TO DETERMINE CASH FLOW FROM
OPERATING ACTIVITIES :

ADD BACK DEPRECIATION 80,000

DECREASE IN ACCOUNTS RECEIVABLE 50,000
INCREASE IN INVENTORY -20,000
INCREASE IN PREPAID EXPENSES -20,000
INCREASE IN ACCOUNTS PAYABLE 50,000
INCREASE IN ACCRUED EXPENSES 20,000
INCREASE IN NOTES PAYABLE 50,000

TOTAL ADJUSTMENTS 210,000

NET CASH FLOWS FROM OPERATING ACTIVITIES 370,000

CASH FLOWS FROM INVESTING ACTIVITIES

INCREASE IN INVESTMENTS (LONG TERM SECURITIES) -10,000
INCREASE IN PLANT AND EQUIPMENT -200,000

NET CASH FLOWS FROM INVESTING ACTIVITIES -210,000

CASH FLOWS FROM FINANCING ACTIVITIES

INCREASE IN BONDS PAYABLE 30,000

PREFERED STOCK DIVIDENS PAID -15,000
COMMON STOCK DIVIDENDS PAID -20,000

NET CASH FLOWS FROM FINANCING ACTIVITIES -5,000

NET INCREASE ( DECREASE ) IN CASH FLOWS 155,000

PREPARE A STATEMENT OF CASH FLOWS FOR CIA SHERWIN WILLIAMS CORPORATION

CIA SHERWIN WILLIAMS CORP

INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31 , 2004
SALES 1,000,000
COST OF GOOD SOLD 550,000
GROSS PROFIT 450,000
SELLING AND ADMINISTRATIVE EXPENSE 120,000
DEPRECIATION EXPENSE 80,000
OPERATING PROFIT(EBIT) 250,000
INTEREST EXPENSE 30,000
EARNING BEFORE TAXES (EBT ) 220,000
TAXES 60,000
EARNINGS AFTER TAXES 160,000
PREFERRED STOCKS DIVIDENDS 15000
EARNINGS AVAILABLE TO COMMON STOCKHOLDERS 145,000
SHARES OUTSTANDINGS 75,000
EARNING PER SHARE $1.93

FOR THE YEAR ENDED DECEMBER 2004

STATEMENT OF RETAINED EARNINGS

RETAINED EARNINGS , BALANCE JANUARY 1 , 2004 400,000

ADD: EARNINGS AVAILABLE TO COMMON STOCKHOLDERS 145,000
DEDUCT : CASH DIVIDENDS DECLARED IN 2004 20,000

RETAINED EARNINGS BALANCE DECEMBER 31 , 2004 $525,000

CIA SHERWIN WILLIAMS CORPORATION

COMPARATIVE BALANCE SHEETS

YEAR END 2003 YEAR END 2004

ASSETS
CURRENT ASSETS
CASH 150,000 305,000
ACCOUNTS RECEIVABLE 400,000 350,000
INVENTORY 300,000 320,000
PREPAID EXPENSES 30,000 50,000

TOTAL CURRENT ASSETS 880,000 1,025,000

INVESTMENTS(LONG TERM) 70,000 80,000

PLANT AND EQUIPMENT 1,000,000 1,200,000
LESS ACCUMULATED DEPRECIATION 500,000 580,000
NET PLANT AND EQUIPMENT 500,000 620,000
TOTAL ASSETS $1,450,000 $1,725,000

LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES
ACCOUNTS PAYABLE 350,000 400,000
NOTES PAYABLE 100,000 150,000
ACCRUED EXPENSES 50,000 70,000

TOTAL CURRENT LIABILITIES 500,000 620,000

LONG TERM LIABILITIES

BONDS PAYABLE 70,000 100,000

TOTAL LIABILITIES 570,000 720,000

STOCKHOLDERS EQUITY
PREFERRED STOCK 100 PER VA 90,000 90,000
COMMON STOCK 1 PAR VALUE 120,000 120,000
CAPITAL PAID IN EXCESS 270,000 270,000
RETAINED EARNINGS 400,000 525,000

TOTAL STYOCKHOLDERS EQUITY 880,000 1,005,000

TOTAL LIABILITIES AND STOCKHOLDERS EQ $1,450,000 $1,725,000

PREPARE A STATEMENT OF CASH FLOWS FOR CROSBY CORPORATION

CROSBY CORPORATION
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31 , 2004
SALES 2,200,000
COST OF GOOD SOLD 1,300,000
GROSS PROFIT 900,000
SELLING AND ADMINISTRATIVE EXPENSE 420,000
DEPRECIATION EXPENSE 150,000
OPERATING PROFIT(EBIT) 330,000
INTEREST EXPENSE 90,000
EARNING BEFORE TAXES (EBT ) 240,000
TAXES 80,000
EARNINGS AFTER TAXES 160,000
PREFERRED STOCKS DIVIDENDS 10000
EARNINGS AVAILABLE TO COMMON STOCKHOLDERS 150,000
SHARES OUTSTANDINGS 120,000
EARNING PER SHARE $1.25

FOR THE YEAR ENDED DECEMBER 2004

STATEMENT OF RETAINED EARNINGS

RETAINED EARNINGS , BALANCE JANUARY 1 , 2004 500,000

ADD: EARNINGS AVAILABLE TO COMMON STOCKHOLDERS 150,000
DEDUCT : CASH DIVIDENDS DECLARED IN 2004 50,000

RETAINED EARNINGS BALANCE DECEMBER 31 , 2004 $600,000

CROSBY CORPORATION
COMPARATIVE BALANCE SHEETS

YEAR END 2003 YEAR END 2004

ASSETS
CURRENT ASSETS
CASH 70,000 100,000
ACCOUNTS RECEIVABLE 300,000 350,000
INVENTORY 410,000 430,000
PREPAID EXPENSES 50,000 30,000

TOTAL CURRENT ASSETS 830,000 910,000

INVESTMENTS(LONG TERM) 80,000 70,000

PLANT AND EQUIPMENT 2,000,000 2,400,000
LESS ACCUMULATED DEPRECIATION 1,000,000 1,150,000
NET PLANT AND EQUIPMENT 1,000,000 1,250,000
TOTAL ASSETS $1,910,000 $2,230,000

LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES
ACCOUNTS PAYABLE 250,000 440,000
NOTES PAYABLE 400,000 400,000
ACCRUED EXPENSES 70,000 50,000

TOTAL CURRENT LIABILITIES 720,000 890,000

LONG TERM LIABILITIES

BONDS PAYABLE 70,000 120,000

TOTAL LIABILITIES 790,000 1,010,000

STOCKHOLDERS EQUITY
PREFERRED STOCK 100 PER VA 90,000 90,000
COMMON STOCK 1 PAR VALUE 120,000 120,000
CAPITAL PAID IN EXCESS 410,000 410,000
RETAINED EARNINGS 500,000 600,000

TOTAL STYOCKHOLDERS EQUITY 1,120,000 1,220,000

TOTAL LIABILITIES AND STOCKHOLDERS EQ $1,910,000 $2,230,000

EAR END 2004
KRAMER CORPORATION

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 2004

CASH FLOWS FROM OPERATING ACTIVITIES :

NET INCOME ( EARNING AFTER TAXES ) 110,500

ADJUSTMENTS TO DETERMINE CASH FLOW FROM
OPERATING ACTIVITIES :

ADD BACK DEPRECIATION 50,000

INCREASE IN ACCOUNTS RECEIVABLE -30,000
INCREASE IN INVENTORY -20,000
DECREASE IN PREPAID EXPENSES 10,000
INCREASE IN ACCOUNTS PAYABLE 35,000
DECREASE IN ACCRUED EXPENSES -5,000

TOTAL ADJUSTMENTS 40,000

NET CASH FLOWS FROM OPERATING ACTIVITIES 150,500

CASH FLOWS FROM INVESTING ACTIVITIES

INCREASE IN INVESTMENTS (LONG TERM SECURITIES) -30,000
INCREASE IN PLANT AND EQUIPMENT -100,000

NET CASH FLOWS FROM INVESTING ACTIVITIES -130,000

CASH FLOWS FROM FINANCING ACTIVITIES

INCREASE IN BONDS PAYABLE 50,000

PREFERED STOCK DIVIDENS PAID -10,500
COMMON STOCK DIVIDENDS PAID -50,000

NET CASH FLOWS FROM FINANCING ACTIVITIES -10,500

NET INCREASE ( DECREASE ) IN CASH FLOWS 10,000