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INSTRUCTIONS: Solve the problem below clearly, accurately, and completely using Excel. Then answer the related questions about your work in complete sentences in a Word

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INSTRUCTIONS: Solve the problem below clearly, accurately, and completely using Excel. Then answer the related questions about your work in complete sentences in a Word document. Work must be complete and submitted as Excel file and Word file to Midterm Exam Part 1 Cash Flow Problem folder in Assignments in D2L no later than 10/8 at 12 noon. Late submissions are penalized 10 points for each 5 minutes late. For example, if your submission is 10 minutes late, there is an immediate loss of 20 points. Submission of completed problem and answers to related questions = maximum of 35 points of total midterm exam grade. Specifically, 35 points out of a total midterm exam of 100 points. Problem Data: Appearing below are the balance sheets for Jordan Inc. at the end of Year 1 and Year 2. Cash Accounts receivable (net) Inventories Equipment Accumulated depreciation Year 2 Year 1 162,500 $ 78,000 78,000 85,000 96,500 90,000 410,000 370,000 (155,000) (158,000) 592,000 465,000 Accounts payable (merchandise creditors) Salaries payable Bonds Payable Common stock, $10 par Paid-in capital in excess of par--common stock Retained earnings $ 53,500 $ 55,000 5,200 4,000 80,000 o 190,000 170,000 62,000 60,000 201,300 176,000 592,000 465,000 Additional information related to transactions occurring in Year 2: Cash dividends declared during Year 2 = $18,200. Common stock was issued for cash. Depreciation expense on the equipment was reported on the income statement. Equipment was purchased for $125,000 cash. Equipment, with a cost of $85,000 and accumulated depreciation of $60,000 was sold for $15,000. . . Additional information related to transactions occurring in Year 2: . . . Cash dividends declared during Year 2 = $18,200. Common stock was issued for cash. Depreciation expense on the equipment was reported on the income statement. Equipment was purchased for $125,000 cash. Equipment, with a cost of $85,000 and accumulated depreciation of $60,000 was sold for $15,000. . . Long term bonds were issued at par generating cash for capital projects. Net income for the year $43,500. Based upon the problem data given above, prepare, in good form, a Statement of Cash Flows for this company for Year 2. Prepare the statement using the indirect format. Prepare the statement using Excel. Be sure all amounts reported are clearly labeled. After completing the Statement of Cash Flows, answer to following questions in complete sentences in a Word document. 1. Very briefly, in one or two sentences, explain the primary purpose of the statement of cash flows. That is, why is the statement important to the stakeholders of the business? 2. Very briefly, in one or two sentences, explain why depreciation expense appears on the statement of cash flows. 3. Did this company have an operating profit or an operating loss in Year 2? Identify which and the amount. Also, briefly explain how/from where you determined your answer. 4. Did this company have net cash inflow from operating activities or net cash outflow from operating activities in Year 2? Identify which and the amount. Also, briefly explain how/from where you determined your answer. 5. Did this company have an overall increase or decrease in cash in Year 2? Identify which and the amount. Also, briefly explain how/from where you determined your

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