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Vulcan Corporation ( a real company whose name has...

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Vulcan Corporation ( a real company whose name has been disguised) is a leading worldwide manufacturer and distributor of uncoated and coated rubberlike fiberboard products. Vulcan's products are market to various industries, including companies in the following businesses: footwear, headwear, luggage, leather goods, belt backing, furniture, electronic integrated component packaging, and automotive supplies. Information developed using Vulcan Corporation's financial statements for the year ended October 31, 2008 appears below. Vulcan Corporation Cash Flow from Operating Activities ($ in thousands Year Ended October 31,2008 Cash received from customers $37,378 Cash paid to suppliers (26,884) Cash paid for general and administrative expenses (8,002) Cash paid for interest (810) Cash paid for income taxes (74) Net cash provided by operating activities $1,608 Selected Balance Sheet Information 31-Oct ($ in thousands) 2008 2007 Accounts receivable, net $14,120 $11,043 Inventories 5,465 5,798 Property, plant and equipment, net 10,707 11,523 Accounts payable 7,756 6,375 Accrued general and administrative expenses 2,559 1,871 Interest payable 130 52 936 675 Additional information -Total comprehensive income for the year ended October 31, 2008 was $336,000. -Other comprehensive loss (net of applicable income taxes) consisted of unrealized loss on investments classified as available-for-sale securities of $286,000 - Equipment purchased during the year totaled $854,000 - The book value of equipment retired during the year totaled $348,000. Required: 1. Compute Vulcan Corporation's net income loss for the year ended October 31, 2008 (Hint: All components of other comprehensive income or loss have been provided) 2. Prepare Vulcan Corporation's combined statement of income (loss) and comprehensive income (loss) for the year ended October 31, 2008 3. Determine Vulcan Corporation's net cash provided by operating activities using the indirect method. Cases C17-1. Vulcan Corporation: Understanding cash flow statements Requirement 1: Vulcan?s net income can be determined by adding the unrealized loss on investments to total comprehensive income reported for the year ended October 31, 2008. Vulcan Corporation Computation of Net Income Year Ended October 31, 2008 ($ in thousands) Comprehensive income as reported $- Plus: Unrealized loss on investments classified as available-for-sale $- Net income $- Requirement 2: In order to prepare Vulcan?s income statement at October 31, 2008, the following items must be determined: sales, cost of goods sold, depreciation expense, general & administrative expense, interest expense and tax expense. These items can readily be determined from the information provided (see below?Calculation of revenues and expenses). Vulcan Corporation Statement of Income and Comprehensive Income Year Ended ($ in thousands) 31-Oct-08 Net sales (Schedule 1) $0 Cost of goods sold (Schedule 2) 0 Gross profit 0 General and administrative expense (Schedule 3) 0 Depreciation expense (Schedule 4) 0 Operating income 0 Interest expense (Schedule 5) $0 Income before income taxes 0 Income tax expense $0 Net income 0 Other comprehensive loss Unrealized loss on investments classified as available-for-sale 0 Comprehensive income $0 Calculation of income statement revenues and expenses: Note all amounts are in thousands Sales Cash collected from customers $0 Plus increase in accounts receivable 0 Net sales (1) $0 Cost of goods sold Cash paid to suppliers $0 Plus decrease in inventories 0 Plus increase in accounts payable 0 Cost of goods sold (2) $0 General and administrative expense Cash paid for general and administrative expense $0 Plus increase in accrued general and administrative expense 0 General and administrative expense (3) $0 Depreciation expense Plant, property & equipment at October 31, 2008 $0 Plant, property & equipment (PP&E) at October 31, 2007 0 Decrease in PP&E 0 Decrease in PP&E comprised of Equipment purchases 0 Equipment retirements at net book value 0 Depreciation expense (plug number) (4) 0 Decrease in PP&E $0 Interest expense Cash paid for interest expense $0 Plus increase in interest payable 0 Interest expense (5) $0 Income tax expense Cash paid for income taxes $0 Plus increase in deferred taxes 0 Income tax expense (6) $0 Requirement 3: Vulcan?s net cash provided by operating activities, using the indirect method, would be $1,608,000. Vulcan Corporation Cash Flow From Operating Activities Year Ended October 31, 2008 ($ in thousands) Net income $0 Adjustments to net income: Depreciation $0 Deferred taxes 0 0 0 Changes in current assets and liabilities: Increase in accounts receivable 0 Decrease in inventories 0 Increase in accounts payable 0 Increase in interest payable 0 Increase in accrued general and administrative expense 0 0 Net cash provided by operating activities $0

 

Paper#6023 | Written in 18-Jul-2015

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