The 2024 income statement and comparative balance sheet of CanGrow, Inc. follow:
CanGrow, Inc.
Income Statement
Year Ended December 31, 2024
Net Sales Revenue $444,000
Cost of Goods Sold 210,200
Gross Profit 233,800
Operating Expenses:
Salaries Expense $71,400
Depreciation Expense—Plant Assets 14,500
Other Operating Expenses 11,000
Total Operating Expenses 96,900
Operating Income 136,900
Other Income and (Expenses):
Interest Revenue 8,800
Interest Expense (21,500)
Total Other Income and (Expenses) (12,700)
Net Income Before Income Taxes 124,200
Income Tax Expense 19,900
Net Income $104,300
CanGrow, Inc.
Comparative Balance Sheet
December 31, 2024 and 2023
2024 2023
Assets
Current Assets:
Cash $26,700 $15,100
Accounts Receivable 26,800 24,900
Merchandise Inventory 79,700 91,600
Long-term Assets:
Land 35,300 15,000
Plant Assets 118,580 113,180
Accumulated Depreciation—Plant Assets (15,680) (15,480)
Total Assets $271,400 $244,300
Liabilities
Current Liabilities:
Accounts Payable $35,400 $30,300
Accrued Liabilities 28,000 31,000
Long-term Liabilities:
Notes Payable 75,000 102,000
Total Liabilities 138,400 163,300
Stockholders' Equity
Common Stock, no par 88,500 64,400
Retained Earnings 44,500 16,600
Total Stockholders' Equity 133,000 81,000
Total Liabilities and Stockholders' Equity $271,400 $244,300
Additionally, CanGrow purchased land of $ 20,300 by financing it 100% with long-term notes payable during 2024. During the year, there were no sales of land, no retirements of stock, and no treasury stock transactions. A plant asset was disposed of for $0. The cost and accumulated depreciation of the disposed asset was $ 14,300. The plant acquisition was for cash.
CanGrow, Inc.
Statement of Cash Flows
Year Ended December 31, 2024
Cash Flows from Operating Activities:
Net Income $104,300
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used for) Operating Activities:
Depreciation Expense—Plant Assets $14,500
Increase in Accounts Receivable (1,900)
Increase in Accounts Payable 5,100
Decrease in Merchandise Inventory 11,900
Decrease in Accrued Liabilities (3,000)
26,600
Net Cash Provided by (Used for) Operating Activities 130,900
Cash Flows from Investing Activities:
Cash Payment for Acquisition of Plant Assets (19,700)
Net Cash Provided by (Used for) Investing Activities (19,700)
Cash Flows from Financing Activities:
Cash Payment of Notes Payable (47,300)
Cash Receipt from Issuance of Common Stock 24,100
Cash Payment of Dividends (76,400)
Net Cash Provided by (Used for) Financing Activities (99,600)
Net Increase (Decrease) in Cash 11,600
Cash Balance, December 31, 2023 15,100
Cash Balance, December 31, 2024 $26,700
What is the non-cash investing and financing activities and what is the total
3 answers
To determine the non-cash investing and financing activities for CanGrow, Inc. during the year 2024, we need to identify transactions that did not involve cash. Based on the information provided, there are two relevant non-cash activities:
Purchase of Land: CanGrow purchased land for $20,300 entirely financed by long-term notes payable. This transaction indicates that CanGrow acquired an asset (land) without any cash outflow at the time of purchase.
Disposal of Plant Asset: The company disposed of a plant asset with a cost of $14,300 and accumulated depreciation of $14,300. Since the asset was disposed of for $0, this does not involve any cash inflow or outflow. However, it is relevant to mention because it represents a non-cash transaction.
Summary of Non-Cash Transactions:
Purchase of Land financed with Long-Term Notes Payable: $20,300 (investing activity)
Disposal of Plant Asset: Non-cash transaction, but no value since disposed for $0.
Total Non-Cash Investing and Financing Activities:
Total Non-Cash Investing Activities: $20,300 (land purchase)
Total Non-Cash Financing Activities: N/A, since we are primarily focusing on the land acquisition in this context.
Final Calculation:
\[ \text{Total Non-Cash Activities} = 20,300 \]
Thus, the total non-cash investing and financing activities for CanGrow, Inc. in 2024 is $20,300.
. How will what you learned in this problem help you evaluate an investment?
A.
Learn how to predict future cash flows, evaluate management decisions, and predict the ability of the company to pay its debts and dividends
B.
Learn how operating activities, investing activities, and financing activities generate cash receipts and cash payments
C.
Both A and B
D.
None of the above
The correct answer is C. Both A and B.
Explanation:
Option A emphasizes the importance of understanding how to predict future cash flows, evaluate management decisions, and assess the company’s ability to meet its obligations (such as paying debts and dividends). These are critical aspects when evaluating the overall financial health and investment potential of a company.
Option B focuses on learning how operating, investing, and financing activities generate cash receipts and payments. Understanding these activities provides insights into how the company manages its resources and generates cash, which is vital for assessing the sustainability and growth potential of investments.
Combining insights from both options A and B gives a comprehensive foundation for evaluating an investment in a company.
11 answers