Here is a comparative balance sheet for Puffed Up Company:

Additional information:
1. Net income for 2008 was $98,000. Land was sold at cost.
2. Cash dividends of $40,000 were declared and paid.
3. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
4. Common stock was issued for $42,000 cash.
5. Sales for 2008 were $978,000.

Instructions
(a) Prepare a statement of cash flows for 2008 using the indirect method.
(b) Compute these cash-basis ratios:
(1) Current cash debt coverage.
(2) Cash debtcoverage.

Transcribed Image Text:

Puffed Up Company Comparative Balance Sheet December 31 Assets 2008 2007 Cash Accounts receivable Inventories Land Equipment Accumulated depreciation 63,000 85,000 170,000 75,000 270,000 (66,000) $597,000 s 22,000 76,000 189,000 100,000 200,000 (32,000) $555,000 Total Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock (S1 par) Retained earnings S 39,000 150,000 216,000 192,000 $597,000 47,000 200,000 174,000 134,000 $555,000 Total