This problem will give you some practice working with financial statements and figuring cash flow. Based on the following information for Mara Corporation, prepare an income statement for 2018 and balance sheet for 2017 and 2018. Next, calculate cash flow from assets, cash flow to creditors, and cash flow to stockholders for Mara for 2018. Use a 21 percent tax rate throughout. 2017 2018
Sales 4,203 4,507
Cost of goods sold 2,422 2,633
Depreciation 785 952
Interest 180 196
Dividends 275 352
Current assets 2,205 2,429
Net fixed assets 7,344 7,650
Current liabilities 1,003 1,255
Long-term debt 3,106 2,085

Mara Corporation

a) Income Statement for the year 2018:

Sales                        $4,507

Cost of goods sold   2,633

Gross profit              $1,874

Depreciation               -952

Interest                        -196

Income before tax    $726

Tax (21% of $726)      -152

Net Income               $574

Retained Earnings     370 (2017)

Dividends                  -352

Retained Earnings   $592

b) Balance Sheet for 2017 and 2018

Current assets        $2,205      $2,429

Net fixed assets         7,344        7,650

Total Assets            $9,549     $10,079

Current liabilities     $1,003       $1,255

Long-term debt         3,106         2,085

Retained Earnings      370             592

Common Stock *      5,070          6,147

Total Liab.+Equity  $9,549     $10,079

Common Stock figures have been obtained as balancing figures.

c) Calculation of Cash Flow in  2018:

i) From Assets:

Increases in Current Assets -$224

Increases in Fixed Assets       -306

Total assets cash outflow     $530

ii) To creditors:

Increases in Current Liabilities =   $252

Decreases in Long-term debt    = -1,021

Total creditors cash outflow          $769

iii) To stockholders:

Increases in Dividends = $352

Explanation:

a) 2017 Income Statement:

Sales                        $4,203

Cost of goods sold   2,422

Gross profit              $1,781

Depreciation               -785

Interest                        -180

Income before tax    $816

Tax (21% of $726)      -171

Net Income               $645

Dividends                  -275

Retained Earnings   $370

b) Cash flow to stockholders is the amount of cash that a company pays out to its shareholders in the form of cash dividends.  Stock dividends are not cash flow to stockholders.

c

explanation:

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