Question
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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