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Cash Is King Inc

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Question;cases, whether in Investment/financial/operation section by cash flow statement.reference by ASC 230-XX-XX-XXExplain your solutionCash IsKing;Inc;CashIsKingInc.,acalendaryear-end;SECregistrant,isaleading;automotiveretailandservicechain.Thecompanyoperates;exclusivelyintheautomotiveaftermarketindustryandisengagedprincipallyintheretailsaleofautomotiveparts,tires,andaccessories,automotiverepairsandmaintenance,andtheinstallationofparts.TheCompany?sliquidityandcapitalrequirementsareprimarily;afunctionofitsworkingcapitalneeds,capitalexpenditures,anddebtservicerequirements.TheCompanyhasthe;following transactionsfor;thecurrent;year;1.Acquisition of;Property, Plant, and Equipment onAccount;OnDecember15th,theCompanyincurred$20millionofcapital;expendituresrelatedtotheacquisitionofmanufacturingequipmentandmachinery.Thetermsoftheinvoiceare2%/15,net30.Theamounts;wereunpaidasofyear-end;(i.e.,includedintheaccountspayable;balance).TheCompanyintendstopaytheinvoice;inearlyJanuary, in accordance with the termsof the;invoice.;2.Insurance Settlement;Proceeds;CashIsKingInc.hasawarehouseandsalesofficeintheGulfCoastRegion.ThedamagecausedbyHurricaneWilliam(Hurricane), aCategory5hurricane,hasrenderedthewarehouse;inoperableandhasalsoforcedthecompany;torenttemporary;officespaceinHoustontoaccommodateitssalesforce.TheCompany;reachedasettlementwithitsinsurance;carrierrelatedtothedamagefromthehurricaneandreceived;proceedsof$15million;fromits insurancecarrierinconnectionwithitsclaimforreimbursement.TheCompany;planstousetheinsuranceproceedstofunditsdefined-benefitpensionplan,ratherthantorebuild the;destroyedfacility.;3.SaleofAccountsReceivable;TheCompanysellsundivided;interestsindesignatedpoolsofqualified;accountsreceivabletoasecuritization;vehicle.The;Companyutilizes;securitizationasa?financingtechnique?(e.g.,toreducemoreexpensivebankdebt?theinterestratesthecompany;obtainsonnotesissuedbythequalifyingspecialpurposeentityarelowerthanthecompany;couldgetonitsownbankdebt).TheCompanyservices,administersandcollectsthereceivablesonbehalfofthepurchaser.;Theagreementincludescertaincovenantsandprovides;forvariouseventsoftermination.Theagreement;alsorequiresthatproceedsfromsecuritizationbeusedtopaydownCompanydebt.Duringthecurrentyear, $11millionofreceivables;generatedfrom;salesoftheCompany?sinventoryweresoldundertheagreement,and,therefore, are not reflectedin the accountsreceivable balance in the Company?s balance sheet.;Required;Determinetheappropriatecashflowstatement;treatment?classificationandtiming,ifapplicable,forthe above;transactions.

 

Paper#41218 | Written in 18-Jul-2015

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