#27 Prepare a statement of cash flows for the Crosby Corporation. Follow the general procedures indicated in Table 2-10 on page 38

CROSBY CORPORATION Statement of cash flows For the year ending December 31,2008

Cash flows from operating activities
Net income (after taxes earnings) =$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
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Decrease in accrued expenses =($20,000)
Total adjustments = $270,000
Net cash flows from operating activities = $430,000

Cash flows from investing activities
Decreased in investments ( long- term securities) =($10,000)
Increase in plant operations and equipment = ($400,000)
Net cash flows from investing activities = ($390,000)

Cash flows from financial activities
Increase in bonds payable = $50,000
Preferred stock dividends paid = ($10,000)
Common stock dividends paid = ($50,000)
Net cash flows from financial activities = ($10,000)

Net increase ( decrease) in cash flows = $30,000

#28 Describe the general relationship between net income and net cash flows from operating activities for the firm.
The general relationship between the net income and the net cash flows from the operating activities for the firm can be determined by what is left in the end. What I mean by this is, after all the expenses have been taken out, this will leave us with what is the total operations of the company? Once we have come to the end result then we can see where we need to come up with for the total cost of operations. The net income is what we start off with and then we determine all the expenses that need to come out to find out the cash flow will be.

#29