Little Bit



Complete Problem 4.5 on p. 141 (Ch. 4). Refer to Exhibit 4.1 on p. 118 (Ch. 4) to create your statement of cash flows.
 Submit your completed statement of cash flows and a 200- to 300-word analysis of the statement in MS WORD (separate document) DO NOT write the summary on the template. The template is the same  template used from Week 3.
The following comparative balance sheets and income statement are available for Little Bit Inc. Prepare a statement of cash flows for 2009 using the indirect method and analyze the statement.
December 31                                                              2009                            2008
 Cash                                                                        $ 40,000                      $ 24,000
Accounts receivable (net) 48,000 41,500
Inventory                                                                       43,000                          34,500
Prepaid expenses                                                      19,000                        15,000
Total Current Assets                                                 $ 150,000                      $ 115,000
Plant and equipment                                              $ 67,000                         $ 61,000
Less accumulated depreciation                                 (41,000)                           (23,000)
Plant and equipment (net)                                      $ 26,000                           $ 38,000
Long-term investments                                            $ 90,000                           $ 89,000
Total Assets                                                        $ 266,000                           $ 242,000
Accounts payable                                                  $ 13,000                            $ 11,000
Accrued liabilities                                                     55,000                                 71,000
Total Current Liabilities                                            $ 68,000                             $ 82,000
Long-term debt                                                    $25,000                                 $ 8,000
Deferred taxes 4,000 3,500
Total Liabilities                                                            $ 97,000                         $ 93,500
Common stock ($1 par) and additional paid-in capital $112,000                         $97,000
Retained earnings                                                          57,000                           51,500
Total Liabilities and Equity                                          $ 266,000                    $ 242,000
Income Statement for 2009
Sales                                                                           $155,000
Cost of goods sold                                                          83,000
Gross profit                                                                 $  72,000
Selling and administrative           $ 45,700
Depreciation                                $18,000                   $ 63,700
Operating Profit                                                          $   8,300
Interest expense                                                        $   2,000
Earnings before tax                                                    $  6,300
Tax expense                                                                $      800
Net income                                                                  $   5,500