FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Statement of Cash Flows (Indirect Method)
The Wolff Company's income statement and comparative
| WOLFF COMPANY Income Statement For the Year Ended December 31 |
||
|---|---|---|
| Sales Revenue | $825,500 | |
| Cost of Goods Sold | $559,000 | |
| Wages Expense | 111,800 | |
| Insurance Expense | 10,400 | |
| Depreciation Expense | 22,100 | |
| Interest Expense | 11,700 | |
| Income Tax Expense | 37,700 | 752,700 |
| Net Income | $72,800 |
| WOLFF COMPANY Balance Sheets |
||
|---|---|---|
| Dec. 31, Current Year | Dec. 31, Previous Year | |
| Assets | ||
| Cash | $14,300 | $6,500 |
| 53,300 | 41,600 | |
| Inventory | 117,000 | 78,000 |
| Prepaid Insurance | 6,500 | 9,100 |
| Plant Assets | 325,000 | 253,500 |
| (88,400) | (66,300) | |
| Total Assets | $427,700 | $322,400 |
| Liabilities and |
||
| Accounts Payable | $9,100 | $13,000 |
| Wages Payable | 11,700 | 7,800 |
| Income Tax Payable | 9,100 | 10,400 |
| Bonds Payable | 169,000 | 97,500 |
| Common Stock | 117,000 | 117,000 |
| 111,800 | 76,700 | |
| Total Liabilities and Stockholders' Equity | $427,700 | $322,400 |
Cash dividends of $37,700 were declared and paid during the current year. Plant assets were purchased for cash and bonds payable were issued for cash. Bond interest is paid semi-annually on June 30 and December 31. Accounts payable relate to merchandise purchases.
Required
a. Calculate the change in cash that occurred during the current year.
b. Prepare a statement of cash flows using the indirect method.
c. Compute
d. Compute the operating-cash-flow-to-
e. Compute the operating-cash-flow-to-capital-expenditures ratio.
a. Change in Cash during the current year $Answer Answer
b. Use a negative sign with
| WOLFF COMPANY Statement of Cash Flows For Year Ended December 31 |
||
|---|---|---|
| Cash Flow from Operating Activities | ||
| Net Income | Answer | |
| Add (deduct) items to convert net income to cash basis | ||
| Depreciation | Answer | |
| Accounts Receivable | Answer | Answer |
| Inventory | Answer | Answer |
| Prepaid Insurance | Answer | Answer |
| Accounts Payable | Answer | Answer |
| Wages Payable | Answer | Answer |
| Income Tax Payable | Answer | Answer |
| Cash Flow Provided by Operating Activities | Answer | |
| Cash Flow from Investing Activities | ||
| Purchase of Plant Assets | Answer | |
| Cash Flow from Financing Activities | ||
| Issuance of Bonds Payable | Answer | |
| Payment of Dividends | Answer | |
| Cash Provided by Financing Activities | Answer | |
| Net Change in Cash | Answer | |
| Cash at Beginning of Year | Answer | |
| Cash at End of Year | Answer |
c. Free cash flow $Answer
d. Operating-cash-flow-to-current-liabilities ratio.
Round answer to two decimal places.
Answer
e. Operating-cash-flow-to-capital-expenditures ratio.
Round answer to two decimal places.
Answer
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Step 1: Definition of cashflow statement
VIEW Step 2: a. Calculation the change in cash that occurred during the current year
VIEW Step 3: b. Cashflow statement using indirect method
VIEW Step 4: c. Calculation of free cashflows
VIEW Step 5: d&e . Computation the operating-cash-flow-to-current-liabilities ratio and capital expenditure ratio
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