0.3 James Franklin is the president and majority shareholder of Kitchens By Design, Inc., a small retail store chain. Recently, Franklin submitted a loan application for Kitchens By Design, Inc., to Montvale National Bank. It called for a $200,000, 9%, ten-year loan to help finance the construction of a building and the purchase of store equipment, costing a total of $250,000, to enable Kitchens By Design, Inc., to open a store in Montvale. Land for this purpose was acquired last year. The bank's loan officer requested a statement of cash flows in addition to the most recent income statement, balance sheet, and retained earnings statement that Franklin had submitted with the loan application As a close family friend, Franklin asked you to prepare a statement of cash flows. From the records provided, you prepared the following statement Cash fans from over actie: NA BRON There able 10 1. Interpolder Decra in Games 1 4000 Nid cachow Cube Blows from being Career 42.500 1 Naslow Cash flow frame financing activities 1400 Na cash flowed for financing at the they 315 Schedule of Nusrash Pacing and lovesting Activities Seadmack at forland SLO After reviewing the statement, Franklin telephoned you and commented, "Are you sure this statement is right?" Franklin then raised the following questions: 1) "How can depreciation be a cash flow 2) "Issuing common stock for the land is listed in a separate schedule. This transaction has nothing to do with cash! Shouldn't this transaction be eliminated from the statement? 3) "How can the gain on sale of investments be a deduction from net income in determining the cash flow from operating activities? 4) "Why does the bank need this statement anyway? They can compute the increase in cash from the balance sheets for the last two years. After jotting down Franklin's questions, you assured him that this statement was "right" However, to alleviate Franklin's concern, you arranged a meeting for the following day. a) How would you respond to each of Franklin's questions from 1 to 4? b) Do you think that the statement of cash flows enhances the chances of receiving the loan? Discuss. 0.3 James Franklin is the president and majority shareholder of Kitchens By Design, Inc., a small retail store chain. Recently, Franklin submitted a loan application for Kitchens By Design, Inc., to Montvale National Bank. It called for a $200,000,9%, ten-year loan to help finance the construction of a building and the purchase of store equipment, costing a total of $250,000, to enable Kitchens By Design, Inc., to open a store in Montvale, Land for this purpose was acquired last year. The bank's loan officer requested a statement of cash flows in addition to the most recent income statement, balance sheet, and retained earnings statement that Franklin had submitted with the loan application As a close family friend, Franklin asked you to prepare a statement of cash flows. From the records provided, you prepared the following statement Cables free News Apuccio 31.00 Der Receivable 11.se 12.00 Testy 12. Ippude 1 INCE I alle in te free 7. 34.000 New Cashflows from west athu Careed wees sol Les Copa Met cash flow from being the Cashews from financing the Capaal die Natasheemed to find this Inici 275 Lushalthebag of the year Castindum Schedule of Nescash sancing and lasting Acties | Tandem parland MO 10 11 After reviewing the statement, Franklin telephoned you and commented, "Are you sure this statement is right?" Franklin then raised the following questions: 1) "How can depreciation be a cash flow 2) "Issuing common stock for the land is listed in a separate schedule. This transaction has nothing to do with cash! Shouldn't this transaction be eliminated from the statement? 3) "How can the gain on sale of investments be a deduction from net income in determining the cash flow from operating activities? 4) "Why does the lank need this statement anyway? They can compute the increase in cash from the balance sheets for the last two years." day After jotting down Franklin's questions, you assured him that this statement was "right. However, to alleviate Franklin's concern, you arranged a meeting for the following a) How would you respond to each of Franklin's questions from 1 to 4? b) Do you think that the statement of cash flows enhances the chances of receiving the loan? Discuss. 0.3 James Franklin is the president and majority shareholder of Kitchens By Design, Inc., a small retail store chain. Recently, Franklin submitted a loan application for Kitchens By Design, Inc., to Montvale National Bank. It called for a $200,000, 9%, ten-year loan to help finance the construction of a building and the purchase of store equipment, costing a total of $250,000, to enable Kitchens By Design, Inc., to open a store in Montvale. Land for this purpose was acquired last year. The bank's loan officer requested a statement of cash flows in addition to the most recent income statement, balance sheet, and retained earnings statement that Franklin had submitted with the loan application As a close family friend, Franklin asked you to prepare a statement of cash flows. From the records provided, you prepared the following statement Cash fans from over actie: NA BRON There able 10 1. Interpolder Decra in Games 1 4000 Nid cachow Cube Blows from being Career 42.500 1 Naslow Cash flow frame financing activities 1400 Na cash flowed for financing at the they 315 Schedule of Nusrash Pacing and lovesting Activities Seadmack at forland SLO After reviewing the statement, Franklin telephoned you and commented, "Are you sure this statement is right?" Franklin then raised the following questions: 1) "How can depreciation be a cash flow 2) "Issuing common stock for the land is listed in a separate schedule. This transaction has nothing to do with cash! Shouldn't this transaction be eliminated from the statement? 3) "How can the gain on sale of investments be a deduction from net income in determining the cash flow from operating activities? 4) "Why does the bank need this statement anyway? They can compute the increase in cash from the balance sheets for the last two years. After jotting down Franklin's questions, you assured him that this statement was "right" However, to alleviate Franklin's concern, you arranged a meeting for the following day. a) How would you respond to each of Franklin's questions from 1 to 4? b) Do you think that the statement of cash flows enhances the chances of receiving the loan? Discuss. 0.3 James Franklin is the president and majority shareholder of Kitchens By Design, Inc., a small retail store chain. Recently, Franklin submitted a loan application for Kitchens By Design, Inc., to Montvale National Bank. It called for a $200,000,9%, ten-year loan to help finance the construction of a building and the purchase of store equipment, costing a total of $250,000, to enable Kitchens By Design, Inc., to open a store in Montvale, Land for this purpose was acquired last year. The bank's loan officer requested a statement of cash flows in addition to the most recent income statement, balance sheet, and retained earnings statement that Franklin had submitted with the loan application As a close family friend, Franklin asked you to prepare a statement of cash flows. From the records provided, you prepared the following statement Cables free News Apuccio 31.00 Der Receivable 11.se 12.00 Testy 12. Ippude 1 INCE I alle in te free 7. 34.000 New Cashflows from west athu Careed wees sol Les Copa Met cash flow from being the Cashews from financing the Capaal die Natasheemed to find this Inici 275 Lushalthebag of the year Castindum Schedule of Nescash sancing and lasting Acties | Tandem parland MO 10 11 After reviewing the statement, Franklin telephoned you and commented, "Are you sure this statement is right?" Franklin then raised the following questions: 1) "How can depreciation be a cash flow 2) "Issuing common stock for the land is listed in a separate schedule. This transaction has nothing to do with cash! Shouldn't this transaction be eliminated from the statement? 3) "How can the gain on sale of investments be a deduction from net income in determining the cash flow from operating activities? 4) "Why does the lank need this statement anyway? They can compute the increase in cash from the balance sheets for the last two years." day After jotting down Franklin's questions, you assured him that this statement was "right. However, to alleviate Franklin's concern, you arranged a meeting for the following a) How would you respond to each of Franklin's questions from 1 to 4? b) Do you think that the statement of cash flows enhances the chances of receiving the loan? Discuss