Question You work as a freelance accounting professional and have been recently engaged by the auditors of Life-Positive Inc. for an assignment. In examining the company’s records, you have extracted the following information: Life-Positive’s Account Balances 2021 ($) 2022 ($) accounts payable 24,600.00 21,250.00 Accounts receivable 15,700.00 12,340.00 Cash 23,450.00 28,600.00 Cost of goods sold 19,700.00 23,000.00 Depreciation 3,090.00 4,590.00 Dividends 5,800.00 10,800.00 Interest 2,340.00 2,890.00 Inventory 7,050.00 8,640.00 Long-term debt 28,000.00 30,000.00 Net fixed assets 41,500.00 48,000.00 Other expenses 2,400.00 2,800.00 Sales 58,000.00 62,500.00 Short-term Notes Payable 2,890.00 2,340.00 Shares outstanding 85,000.00 90,000.00 tax rate is 32% 4. Calculate the cash flow from assets, cash flow to creditors, and cash flow to stockholders for 2022. 5. Calculate the Dividends per Share and Earnings per Share for each year for Brown Company. 6. Briefly comment on the company’s cash flows for 2022 in light of an expansion plan which will be financed by both debt and equity.

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 9RE: Refer to RE6-8. On April 23, 2020, McKinncy Co. receives a check, from Mangold Corporation for...
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You work as a freelance accounting professional and have been
recently engaged by the auditors of Life-Positive Inc. for an
assignment. In examining the company’s records, you have extracted
the following information:

Life-Positive’s Account Balances
                                                       2021 ($) 2022 ($)

 accounts payable                 24,600.00     21,250.00
Accounts receivable             15,700.00    12,340.00
Cash                                     23,450.00   28,600.00
Cost of goods sold              19,700.00      23,000.00
Depreciation                       3,090.00          4,590.00
Dividends                           5,800.00       10,800.00
Interest                              2,340.00         2,890.00
Inventory                          7,050.00         8,640.00
Long-term debt               28,000.00       30,000.00
Net fixed assets             41,500.00       48,000.00
Other expenses            2,400.00          2,800.00
Sales                           58,000.00        62,500.00
Short-term Notes Payable 2,890.00    2,340.00
Shares outstanding      85,000.00     90,000.00

tax rate is 32%

4. Calculate the cash flow from assets, cash flow to creditors,
and cash flow to stockholders for 2022. 
5. Calculate the Dividends per Share and Earnings per Share for
each year for Brown Company. 
6. Briefly comment on the company’s cash flows for 2022 in light
of an expansion plan which will be financed by both debt and
equity. 

Expert Solution
Step 1

Cash flow shows the movement of cash spending and income of a company over a specific time. A statement showing the operating, financing and investment events is prepared to identify the available cash balance at a certain time. It helps to get an overview of the financial improvement or decline related to cash incomings and outgoings.

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