By using a vertical analysis, compute the following analytical measures for year 2010:

Current ration

Quick Ratio

Accounts Receivable

Inventory Turnover

ACCT 301 - Chapter 12 Statement of Cash Flows Class Exercise - Preparing Statements of Cash Flows The comparative balance sheet of Posner Company, for 2010 and the preceding year ended December 31, 2009, appears below in condensed form: Year 2010 Cash Accounts receivable (net) Inventories Investments Equipment Accumulated depreciation-equipment $ Accounts payable Bonds payable, due 2010 Common stock, $10 par Paid-in capital in excess of par-common stock Retained earnings $ Year 2009 53,000 37,000 108,500 573,200 (142,000) 629,700 $ 50,000 48,000 100,000 70,000 450,000 (176,000) 542,000 62,500 335,000 43,800 100,000 285,000 70,000 162,200 629,700 $ 55,000 58,200 542,000 $ 625,700 340,000 285,700 The income statement for the current year is as follows: Sales Cost of merchandise sold Gross profit Operating expenses: Depreciation expense Other operating expenses Income from operations 26,000 68,000 Other income (expense), net: Gain on sale of investment Interest expense Income before income tax 4,000 (6,000) Income tax expense Net income 94,000 191,700 (2,000) 189,700 $ 60,700 129,000 Additional data for the current year are as follows: (a) Fully depreciated equipment costing $60,000 was scrapped, no salvage, and equipment was purchased for $183,200. (b) Bonds payable for $100,000 were retired by payment at their face amount. (c) 5,000 shares of common stock were issued at $13 for cash. (d) Cash dividends declared and paid, $25,000. Prepare a statement of cash flows, using the indirect method of reporting cash flows from operating activities. Posner Company Statement of Cash Flows For the Year Ended December 31, 2010 Cash flows from operating activities: Net income, per income statement Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense (Gain) loss on sale of investments (Gain) loss on sale of PP & E (Increase) decrease in accounts receivable (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable Increase (decrease) in deferred revenue Increase (decrease) in income taxes payable Net cash provided (used) by operating activities $ 26,000 (4,000) 11,000 (8,500) 18,700 - 129,000 43,200 $ Cash flows from investing activities: Proceeds from sale of investments Purchase of buildings Purchase of equipment Net cash provided (used) by investing activities 74,000 (183,200) Cash flows from financing activities: Issuance of common stock Cash paid to retire bonds payable Payment of cash dividends Net cash provided (used) by financing activities 65,000 (100,000) (25,000) (109,200) (60,000) Increase (decrease) in cash Cash, beginning of period Cash, end of period Noncash investing and financing activities: Issuance of bonds payable in exchange for land Issuance of common stock to retire bonds payable 172,200 3,000 50,000 $ 53,000 - ACCT 301 - Chapter 12 Statement of Cash Flows Class Exercise - Preparing Statements of Cash Flows The comparative balance sheet of Barry Company, for 2010 and the preceding year ended December 31, 2009, appears below in condensed form: Year 2010 Cash Accounts receivable (net) Inventories Investments Equipment Accumulated depreciation-equipment $ $ Accounts payable Bonds payable, due 2010 Common stock, $20 par Premium on common stock Retained earnings $ $ Year 2009 72,000 $ 61,000 121,000 515,000 (153,000) 616,000 $ 42,500 70,200 105,000 100,000 425,000 (175,000) 567,700 59,750 $ 375,000 50,000 131,250 616,000 $ 47,250 75,000 325,000 25,000 95,450 567,700 Additional data for the current year are as follows: (a) Net income, $75,800. (b) Depreciation reported on income statement, $38,000. (c) Fully depreciated equipment costing $60,000 was scrapped, no salvage, and equipment was purchased for $150,000. (d) Bonds payable for $75,000 were retired by payment at their face amount. (e.) 2,500 shares of common stock were issued at $30 for cash. (f) Cash dividends declared and paid, $40,000. (g) Investments of $100,000 were sold for $125,000. Prepare a statement of cash flows, using the indirect method of reporting cash flows from operating activities. Barry Company Statement of Cash Flows For the Year Ended December 31, 2010 Cash flows from operating activities: Net income, per income statement Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense (Gain) loss on sale of investments (Gain) loss on sale of PP & E (Increase) decrease in accounts receivable (Increase) decrease in inventory (Increase) decrease in prepaid expenses Increase (decrease) in accounts payable Increase (decrease) in deferred revenue Increase (decrease) in income taxes payable Net cash provided (used) by operating activities $ 38,000 (25,000) 9,200 (16,000) 12,500 - 75,800 18,700 $ Cash flows from investing activities: Proceeds from sale of investments Purchase of buildings Purchase of equipment Net cash provided (used) by investing activities 125,000 (150,000) Cash flows from financing activities: Issuance of common stock Cash paid to retire bonds payable Payment of cash dividends Net cash provided (used) by financing activities 75,000 (75,000) (40,000) (25,000) (40,000) Increase (decrease) in cash Cash, beginning of period Cash, end of period Noncash investing and financing activities: Issuance of bonds payable in exchange for land Issuance of common stock to retire bonds payable 94,500 29,500 42,500 $ 72,000