2 30 points Balance Sheet and Income Statement of Zwitter In

2. (30 points) Balance Sheet and Income Statement of Zwitter Inc. are given below as of Dec 31 2014 and Dec 31 2015 Calculate 2015 Cash Flow to/from: a) 4 points) Assets b) (4 points) Creditors c) 4 points) Stock Holders d) (4 points) If Zwitter distributes same percentage of its Net Income as dividends each year what was the amount of dividends that were distributed in 2014? (4 points) Which accounts would be affected (and by which amount) in the Balance Sheet if Zwitter were to distribute NO dividends in 2015 but retain all earnings (Net Income) within the company? e) BALANCE SHEET-ZWITTER COMPANY- in thousand 2014 2015 2014 2015 Cash Acc Rec Inventory Total Current Assets Net Fixed Assets Total Assets 84 100.8 45.6 122 146.4 720 812 866.4 500 52 80.4 1364 1446.8 110 132 Accounts Payable 34 40.8 Notes Payable 38 24 Total Current Liabilities 164 196.8 Long Term Debt 200 150Total Liabilities 690 1364 1446.8 Common Stock 500 Accumulated Retained Earnings Total Liabilities and Owners\' Equity NCOME STATEMENT ZWITTER-in thousands Revenue Cost of Goods Sold Selling, Administrative Costs Depreciation EBIT Interest Income Before Taxes Taxes Net Income 2014 2015 500 600 300 360 60 10 140170 72 98 14.219.6 56.878.4 50 10 69 71

Solution

Calculation of Cash flows for 2015

A

Assets

Opening balance of Assets

1200

Less: Depreciation for 2015

-10

Closing balance of Fixed assets

-1250

Cash outflows (Additions to Assets)

-60

B

Creditors

Opening balance of Creditors

84

Add: Cost of goods sold (Assumed that on credit)

360

Less: Closing balance of Creditors

-100.8

Cash Inflows from Creditors

343.2

C

2015 Dividend paid

Net income

78.4

Opening retained earnings

52

Less: Closing retained earnings

-80.4

Dividends paid

50

% of dividends paid on net income

63.78%

Ans

Amount of dividend that were distributed in 2014 is (56.8*63.78%)

36.22704

D

Accounts will be effected : Accumulated retained earnings (Owners’ equity)

Amount effected = Dividend distributed =$ 50

	Calculation of Cash flows for 2015
A	Assets
	Opening balance of Assets	1200
	Less: Depreciation for 2015	-10
	Closing balance of Fixed assets	-1250
	Cash outflows (Additions to Assets)	-60
B	Creditors
	Opening balance of Creditors	84
	Add: Cost of goods sold (Assumed that on credit)	360
	Less: Closing balance of Creditors	-100.8
	Cash Inflows from Creditors	343.2
C	2015 Dividend paid
	Net income	78.4
	Opening retained earnings	52
	Less: Closing retained earnings	-80.4
	Dividends paid	50
	% of dividends paid on net income	63.78%
Ans	Amount of dividend that were distributed in 2014 is (56.8*63.78%)	36.22704
D	Accounts will be effected : Accumulated retained earnings (Owners’ equity)
	Amount effected = Dividend distributed =$ 50