Here are the financial statements of YoYo Company.

Additional data:
1. Dividends of $36,000 were declared and paid.
2. During the year equipment was sold for $10,000 cash. This equipment cost $15,000 originally and had a book value of $10,000 at the time of sale.
3. All depreciation expense, $8,000, is in the selling expense category.
4. All sales and purchases are on account.
5. Additional equipment was purchased for $7,000 cash.

Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Compute these cash-basis measures:
(1) Current cash debt coverage ratio.
(2) Cash debt coverage ratio.
(3) Free cashflow.

Transcribed Image Text:

YoYo Company Comparative Balance Sheets December 31 $70,000 (27,000) $78,000 43,000 (24,000) $126.000 Liabilities and Stockholders Equity $126,000 YoYo Company Income Statement For the Year Ended December 31, 2008 $28,000 9,000 income before income taxes