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Answer the following questions based on Major, Inc.'s comparative balance sheet and income statement. Major Company Comparative Balance Sheets December 31 2012 2011 Cash $29,700

Answer the following questions based on Major, Inc.'s comparative balance sheet and income statement.

Major Company

Comparative Balance Sheets

December 31 2012 2011
Cash $29,700 $10,200
Accounts receivable (net) 53,400 20,300
Inventory 39,000 42,000
Long-term investments 0 15,000
Plant Assets, net of depreciation 180,900 125,000
$303,000 $212,500
Accounts payable $16,000 $26,500
Wage payable 20,000 10,000
Dividends payable 8,000 7,000
Long-term notes payable 40,000 50,000
Common stock 150,000 90,000
Retained earnings 69,000 29,000
$303,000 $212,500

Major Company

Income Statement

Year ended December 31, 2012
Sales Revenue 340,000
Cost of goods sold (200,000)
Operating expense (58,400)
Depreciation expense (10,600)
Gain on sale of investments 4,000
Net income 75,000

Other Available Information:

1. During 2012, Major, Inc didn't sell plant asset and didn't purchase additional investment

2. Dividends were declared and some were paid to common stockholders during the year. No shares were repurchased during the year.

3. No shares were repurchased and no new debt was issued.

4. All the transactions related to plant assets, investment, long-term debt, dividends, and common stock only involve cash.

Required:

a. Prepare a Statement of Cash Flows for Major Company for the year ended December 31, 2012. Show the cash flows from operations using the indirect method.

b. Suppose 80% of the sales are credit sale. What is the cash collection from customers during 2012?

c. Suppose 90% of the inventories are purchased on account. What is the cash payment to suppliers during 2012?

d. Compute the account payable turnover ratio in year 2012.

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