Accounting 301, Intermediate Accounting, Fall 2019 Cash flows case: (indirect method). Dubai Company has not yet prepared the statement of cash flows. The Balance sheet as of December 31, 2018, January 1, 2018 and the additional information regarding the statement of income and retained earnings for the year are presented below. Dubai Company Comparative Balance Sheet (Dollars in Millions) Assets 12/31/2018 1/1/2018 Current Assets Cash S 49 Account Receivables 645 580 660 615 Total Current Assets 1.354 1.274 Property, Plant, and Equipment 1.515 1,466 Less Accumulated Depreciation 541 Net Property, Plant, and Equipment 750 Total Assets S2,104 $2,099 Inventory 825 S250 Liability and Equity Current Liability: Account payable SISS Accrued Liability 165 Income tax payable Total current Liability $516 $390 Bonds payable 450 Total Liability 966 1.010 Stockholders' Equity: Common Stock 161 161 Retained carnings 977 928 Total Stockholders' Equity 1,138 1,089 Total Liability and Stockholders' Equity $2,104 $2.099 Dubai Income statement ((Dollars in Millions) Net Income Cost of goods sold $3.600 2.550 Gross Margin 1.050 Selling and administrative Exnenses 875 - 620 Bonds payable 450 Total Liability 966 1,010 Stockholders' Equity: Common Stock 161 161 928 Retained earnings _977 Total Stockholders' Equity 1,138 1,089 Total Liability and Stockholders' Equity S2,104 $2.099 Dubai Income statement ((Dollars in Millions) Net Income Cost of goods sold $3.600 2.550 Gross Margin 1,050 Selling and administrative Expenses 875 Net Operating Income 175 Nonoperation items: Gain on sale of Equipment Income before Taxes Income tax 178 Net Income SIIS Dubai also provided the following information: 1. The company sold equipment that had an original cost of $13 million and accumulated depreciation of $8 million The cash proceeds from the sale were $8 million. The gain on the sale was S3 million 2. The company did not issue any bonds during the year. The company paid a cash dividend during the year The company did not complete any common stock transactions during the year Required: Prepare a statement of cash flows for the year using the indirect method 2. Compute Dubai's free cash flow Assume that Dubai has sales of $3,800, Net income of $135, and net cash provided by operating activities of S150 in the prior year. Prepare a memo that summarizes your interpretations of Dubai's financial performance 4 Use the analysis of Dubai Company to illustrate how information in the balance sheet and the statement of cash flows helps the users of the financial statements. Accounting 301, Intermediate Accounting, Fall 2019 Cash flows case: (indirect method). Dubai Company has not yet prepared the statement of cash flows. The Balance sheet as of December 31, 2018, January 1, 2018 and the additional information regarding the statement of income and retained earnings for the year are presented below. Dubai Company Comparative Balance Sheet (Dollars in Millions) Assets 12/31/2018 1/1/2018 Current Assets Cash S 49 Account Receivables 645 580 660 615 Total Current Assets 1.354 1.274 Property, Plant, and Equipment 1.515 1,466 Less Accumulated Depreciation 541 Net Property, Plant, and Equipment 750 Total Assets S2,104 $2,099 Inventory 825 S250 Liability and Equity Current Liability: Account payable SISS Accrued Liability 165 Income tax payable Total current Liability $516 $390 Bonds payable 450 Total Liability 966 1.010 Stockholders' Equity: Common Stock 161 161 Retained carnings 977 928 Total Stockholders' Equity 1,138 1,089 Total Liability and Stockholders' Equity $2,104 $2.099 Dubai Income statement ((Dollars in Millions) Net Income Cost of goods sold $3.600 2.550 Gross Margin 1.050 Selling and administrative Exnenses 875 - 620 Bonds payable 450 Total Liability 966 1,010 Stockholders' Equity: Common Stock 161 161 928 Retained earnings _977 Total Stockholders' Equity 1,138 1,089 Total Liability and Stockholders' Equity S2,104 $2.099 Dubai Income statement ((Dollars in Millions) Net Income Cost of goods sold $3.600 2.550 Gross Margin 1,050 Selling and administrative Expenses 875 Net Operating Income 175 Nonoperation items: Gain on sale of Equipment Income before Taxes Income tax 178 Net Income SIIS Dubai also provided the following information: 1. The company sold equipment that had an original cost of $13 million and accumulated depreciation of $8 million The cash proceeds from the sale were $8 million. The gain on the sale was S3 million 2. The company did not issue any bonds during the year. The company paid a cash dividend during the year The company did not complete any common stock transactions during the year Required: Prepare a statement of cash flows for the year using the indirect method 2. Compute Dubai's free cash flow Assume that Dubai has sales of $3,800, Net income of $135, and net cash provided by operating activities of S150 in the prior year. Prepare a memo that summarizes your interpretations of Dubai's financial performance 4 Use the analysis of Dubai Company to illustrate how information in the balance sheet and the statement of cash flows helps the users of the financial statements