Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
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Chapter 22, Problem 22.3E
a.
To determine
Cash flow from operating activities of AFI under indirect method.
b.
To determine
Cash flow from operating activities of AFI under direct method.
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The following data were taken from the comparative balance sheet of Osborn Sisters Company for the years ended December 31, 2019 and December 31, 20Y8:
Dec. 31, 20Y9
Dec. 31, 20YS
Cash
$337,500
$254,100
Temporary investments
360,200
278,400
Accounts and notes receivable (net)
331,300
303,500
Inventories
463,100
376,200
Prepaid expenses
173,900
107,800
Total current assets
$1,666.000
$1,320,000
Accounts payable
$284,200
$308.000
Accrued liabilities
205,800
132,000
Total current Fabilities
$490,000
$440,000
a. Determine for each year (1) the working capital, (2) the current ratio, and (3) the quick ratio. Round ratios to one decimal place.
20Y9
20Y8
%24
Working capital
Current ratio
Quick ratio
Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were
Inventory, $49,900; total assets, $259,400; common stock, $87,000; and retained earnings, $28,750.)
Assets
Cash
Short-term investments
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
Sales
CABOT CORPORATION
Balance Sheet
December 31 of current year
Liabilities and Equity
$ 12,000
Accounts payable
$ 17,500
8,400
Accrued wages payable
4,800
31,200
Income taxes payable
3,300
36,150
3,050
148,300
Long-term note payable, secured by mortgage on plant assets
68,400
Common stock
87,000
Retained earnings
58,100
$ 239,100
Total liabilities and equity
$ 239,100
CABOT CORPORATION
Income Statement
For Current Year Ended December 31
$ 451,600
Cost of goods sold
Gross profit
Operating expenses
Interest expense
Income before taxes
Income tax expense
Net income
298,250
153,350
99,400…
Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts
at December 31 of the prior year were inventory, $46,900; total assets, $179,400; common stock, $88,000; and retained earnings,
$31,286.)
Assets
Cash
Short-term investments
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
CABOT CORPORATION
Income Statement
Cost of goods sold
Gross profit
For Current Year Ended December 31
Sales
Operating expenses
Interest expense
Income before taxes
Income tax expense
Net income
$ 18,000
9,000
33,800
Req 1 and 2 Reg 3 Req 4
Compute the debt-to-equity ratio.
Numerator:
$ 455,600
298,150
157,450
98,500
4,000
54,950
22,136
$ 32,814
30,150
3,050
154,300 Retained earnings
$ 248,300 Total liabilities and equity
1
CABOT CORPORATION
Balance Sheet
December 31 of current year
Liabilities and Equity
Accounts payable
Accrued wages payable
Income taxes payable
Complete this question by…
Chapter 22 Solutions
Intermediate Accounting
Ch. 22 - Prob. 22.1QCh. 22 - Prob. 22.2QCh. 22 - Prob. 22.3QCh. 22 - Prob. 22.4QCh. 22 - Prob. 22.5QCh. 22 - How do firms reclassify gains and losses on the...Ch. 22 - Prob. 22.7QCh. 22 - Prob. 22.8QCh. 22 - Prob. 22.9QCh. 22 - Prob. 22.10Q
Ch. 22 - Prob. 22.11QCh. 22 - What approach is used in preparing the operating...Ch. 22 - Under the indirect method, do firms subtract bond...Ch. 22 - Do firms subtract pension expense from net income...Ch. 22 - Prob. 22.15QCh. 22 - Prob. 22.16QCh. 22 - Prob. 22.1MCCh. 22 - Prob. 22.2MCCh. 22 - Big Dollars Corporation's comparative financial...Ch. 22 - Prob. 22.4MCCh. 22 - Prob. 22.5MCCh. 22 - Sykes Corporation's comparative balance sheets at...Ch. 22 - Prob. 22.7MCCh. 22 - Prob. 22.8MCCh. 22 - Prob. 22.1BECh. 22 - Prob. 22.2BECh. 22 - Prob. 22.3BECh. 22 - Prob. 22.4BECh. 22 - Prob. 22.5BECh. 22 - Prob. 22.6BECh. 22 - Prob. 22.7BECh. 22 - Operating Activities Section, Indirect Method,...Ch. 22 - Prob. 22.9BECh. 22 - Prob. 22.10BECh. 22 - Prob. 22.11BECh. 22 - Prob. 22.12BECh. 22 - Prob. 22.13BECh. 22 - Operating Activities Section, Indirect Method,...Ch. 22 - Prob. 22.15BECh. 22 - Prob. 22.16BECh. 22 - Prob. 22.17BECh. 22 - Prob. 22.18BECh. 22 - Prob. 22.19BECh. 22 - Prob. 22.20BECh. 22 - Prob. 22.21BECh. 22 - Prob. 22.22BECh. 22 - Complex Transactions, Acquisitions and...Ch. 22 - Prob. 22.24BECh. 22 - Prob. 22.25BECh. 22 - Complex Transactions, Change in Accounts...Ch. 22 - Prob. 22.27BECh. 22 - Prob. 22.28BECh. 22 - Prob. 22.1ECh. 22 - Prob. 22.2ECh. 22 - Prob. 22.3ECh. 22 - Prob. 22.4ECh. 22 - Prob. 22.5ECh. 22 - Prob. 22.6ECh. 22 - Prob. 22.7ECh. 22 - Prob. 22.8ECh. 22 - Prob. 22.9ECh. 22 - Prob. 22.10ECh. 22 - Statement of Cash Flows, Indirect Method....Ch. 22 - Prob. 22.12ECh. 22 - Prob. 22.13ECh. 22 - Prob. 22.14ECh. 22 - Prob. 22.15ECh. 22 - Prob. 22.16ECh. 22 - Prepare Statement of Cash Flows, Direct Method....Ch. 22 - Prob. 22.2PCh. 22 - Prob. 22.3PCh. 22 - Prob. 22.4PCh. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Statement of Cash Flows, Indirect Method, Complex...Ch. 22 - Prob. 22.11PCh. 22 - Prob. 22.12PCh. 22 - Prob. 22.13PCh. 22 - Statement of Cash Flows, Direct Method, Complex...Ch. 22 - Prob. 1JCCh. 22 - Prob. 1FSCCh. 22 - Prob. 1SSCCh. 22 - Surfing the Standards Case 2: Cash Flow per Share...Ch. 22 - Basis for Conclusions Cases Basis for Conclusions...Ch. 22 - Basis for Conclusions Case 2: Indirect versus...
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