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Ch.14- Statement of Cash flows

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Question;Problem 14A ? 5 Prepare;a Statement of Cash Flows.;A comparative balance;sheet and income statement for Eaton Company follows;Eaton;Company;Comparative;Balance Sheet;December;31, 2011 and 2011;2011;2010;Assets;Current Assets;Cash;$4;$11;Accounts receivable;$310;$230;Inventory;$160;$195;Prepaid expenses;$8;$6;Total current Assets;$482;$442;Plant and equipment;$500;$420;Less: Accumulated Depreciation;$85;$70;Net plant and equipment;$415;$350;Long term investments;$31;$38;Total Assets;$928;$830;Liabilities and Stockholder's equity;Current Liabilities;Accounts Payable;$300;$225;Accrued Liabilities;$70;$80;Income taxes payable;$71;$63;Total current Liabilities;$441;$368;Bonds Payable;$195;$170;Total Liabilities;$636;$538;Stockholder's equity;Common Stock;$160;$200;Retained earnings;$132;$92;Total Stockholder's equity;$292;$292;Total Liabilities and Stockholder's;equity;$928;$830;Eaton;Company;Income;Statement;For;the year ended December 31, 2011;Sales;$750;Cost of goods sold;$450;Gross Margin;$300;Selling and administrative expenses;$223;Net operating income;$77;Non-operating items;Gain on sales of investments;$5;Loss on sale of equipment;-$2;$3;Income before taxes;$80;Income tax;$24;Net Income;$56;During 2011, Eaton;sold some equipment for $18 that had cost $30 and on which there was;accumulated depreciation of $10. In addition, the company sold long term;investments for $12 that had cost $7 when purchased several years ago. A cash;dividend was paid during 2011 and the company repurchased $40 of its stock.;Eaton did not retire any bonds during 2011.;Required;1. Using the direct method, determine the net;cash provided by operating activities for 2011.;2. Using the information in (1) above, along;with an analysis of remaining balance sheet accounts, prepare a statement of;cash flows for 2011.;Problem 14 ? 8 Prepare;a Statement of Cash Flows.;A comparative balance;sheet and income statement for Eaton Company follows;Eaton;Company;Comparative;Balance Sheet;December;31, 2011 and 2011;2011;2010;Assets;Current Assets;Cash;$4;$11;Accounts receivable;$310;$230;Inventory;$160;$195;Prepaid expenses;$8;$6;Total current Assets;$482;$442;Plant and equipment;$500;$420;Less: Accumulated Depreciation;$85;$70;Net plant and equipment;$415;$350;Long term investments;$31;$38;Total Assets;$928;$830;Liabilities and Stockholder's equity;Current Liabilities;Accounts Payable;$300;$225;Accrued Liabilities;$70;$80;Income taxes payable;$71;$63;Total current Liabilities;$441;$368;Bonds Payable;$195;$170;Total Liabilities;$636;$538;Stockholder's equity;Common Stock;$160;$200;Retained earnings;$132;$92;Total Stockholder's equity;$292;$292;Total Liabilities and Stockholder's;equity;$928;$830;Eaton;Company;Income;Statement;For;the year ended December 31, 2011;Sales;$750;Cost of goods sold;$450;Gross Margin;$300;Selling and administrative expenses;$223;Net operating income;$77;Non-operating items;Gain on sales of investments;$5;Loss on sale of equipment;-$2;$3;Income before taxes;$80;Income tax;$24;Net Income;$56;During 2011, Eaton;sold some equipment for $18 that had cost $30 and on which there was;accumulated depreciation of $10. In addition, the company sold long term;investments for $12 that had cost $7 when purchased several years ago. A cash;dividend was paid during 2011 and the company repurchased $40 of its stock.;Eaton did not retire any bonds during 2011.;Required;3. Using the indirect method, determine the;net cash provided by operating activities for 2011.;4. Using the information in (1) above, along;with an analysis of remaining balance sheet accounts, prepare a statement of;cash flows for 2011.;Problem 14 ? 14 Prepare;and Interpret a Statement of Cash Flows, Free Cash Flow;Sharon Feldman, president of Allied Company, considered;$20,000 to be a minimum cash balance for operating purposes. As can be seen;from the following statements, only $15,000 in cash was available at the end of;2011. Because the company reported a large net income for the year, and also;issued bonds and sold some long term investments, the sharp decline in cash is;puzzling to Ms. Feldman.;Allied;Company;Comparative;Balance Sheet;December;31, 2011 and 2011;2011;2010;Assets;Current Assets;Cash;$15,000;$33,000;Accounts receivable;$2,00,000;$2,10,000;Inventory;$2,50,000;$1,96,000;Prepaid expenses;$7,000;$15,000;Total current Assets;$4,72,000;$4,54,000;Long term investments;$90,000;$1,20,000;Plant and equipment;$8,60,000;$7,50,000;Less: Accumulated Depreciation;$2,10,000;$1,90,000;Net plant and equipment;$6,50,000;$5,60,000;Total Assets;$12,12,000;$11,34,000;Liabilities and Stockholder's equity;Current Liabilities;Accounts Payable;$1,75,000;$2,30,000;Accrued Liabilities;$8,000;$15,000;Income taxes payable;$42,000;$39,000;Total current Liabilities;$2,25,000;$2,84,000;Bonds Payable;$2,00,000;$1,00,000;Total Liabilities;$4,25,000;$3,84,000;Stockholder's equity;Common Stock;$5,95,000;$6,00,000;Retained earnings;$1,92,000;$1,50,000;Total Stockholder's equity;$7,87,000;$7,50,000;Total Liabilities and Stockholder's;equity;$12,12,000;$11,34,000;Allied;Company;Income;Statement;For;the year ended December 31, 2011;Sales;$8,00,000;Cost of goods sold;$5,00,000;Gross Margin;$3,00,000;Selling and administrative expenses;$2,14,000;Net operating income;$86,000;Non-operating items;Gain on sales of investments;$20,000;Loss on sale of equipment;-$6,000;$14,000;Income before taxes;$1,00,000;Income tax;$30,000;Net Income;$70,000;The following additional information is available for the;year 2011;a.;The company sold long term investments with an;original cost of $30,000 for $50,000 during the year.;b.;Equipment that had cost $90,000 and on which;there was $40,000 in accumulated depreciation was sold during was sold during;the year for $44,000.;c.;The company declared and paid cash dividend;during the year.;d.;The stock of a dissident stockholder was;repurchased for cash and retired during the year. No issues of stock were made.;e.;The company did not retire any bonds during the;year.;Required;1.;Using the indirect method, compute the net cash;provided by operating activities for 2011.;2.;Prepare a statement of cash flows for 2011.

 

Paper#37308 | Written in 18-Jul-2015

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