The financial statements of Jim Carrey Company appear below.

Additional information:
1. Dividends of \($9,000\) 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 ol \($10,000\) at the time of sale.
3. All depreciation expense, \($1\) 1,000, is in the selling expense category.
4. All sales and purchases are on account.
5. Additional equipment was purchased lor \($7,000\) cash.

Instructions

(a) Prepare a statement of cash flows using the indirect method.

(b) Compute the following cash-basis ratios.
(1) Current cash debt coverage ratio.
(2) Cash return on sales ratio.
(3) Cash debt coverage ratio.
(4) Free cash flow.

Transcribed Image Text:

Assets Cash Accounts receivable Merchandise inventory JIM CARREY COMPANY Comparative Balance Sheets December 31 Property, plant, and equipment Less: Accumulated depreciation Total 2002 2001 $ 24,000 $ 13,000 20,000 14,000 38,000 35,000 $70,000 $78,000 (30,000) 40,000 (24,000) 54,000 $122,000 $116,000