A comparative balance sheet for Gokhale Corporation is presented below.

Additional information:
1. Net income for 2014 was $187,500.
2. Cash dividends of $90,000 were declared and paid.
3. Bonds payable amounting to $75,000 were retired through issuance of common stock.

Instructions
(a) Prepare a statement of cash flows for 2014 for Gokhale Corporation.
(b) Determine Gokhale Corporation’s current cash debt coverage ratio, cash debt coverage ratio, and free cash flow. Comment on its liquidity and financialflexibility.

Transcribed Image Text:

December 31 Assets 2014 2013 Cash Accounts receivable Inventories Land Equipment $109,500 123,000 270,000 106,500 390,000 $33,000 99,000 283,500 165,000 300,000 ccumuated depreciation-equipment 103,50063,000 Total $895,500 $817,500 ers $51,000 225,000 321,000 298,500 $895,500 $ 70,500 300,000 246,000 201,000 $817,500 Accounts payable Bonds payable ommon stock ($1 par) Retained earnings Total