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P 12-1A. Statement of Cash Flows (Indirect Method) The Wolff Company's income statement and comparative balance sheets at December 31 of 2016 and 2016 are
| P 12-1A. Statement of Cash Flows (Indirect Method) | ||||||||||
| The Wolff Company's income statement and comparative balance sheets at December 31 of 2016 and 2016 are shown below: | ||||||||||
| WOLFF COMPANY | ||||||||||
| Income Statement | ||||||||||
| For the Year Ended December 31, 2016 | ||||||||||
| Sales revenue | $645,000 | |||||||||
| Cost of goods sold. | $430,000 | |||||||||
| Wages expense | 86,000 | |||||||||
| Insurance expense | 12,000 | |||||||||
| Depreciation expense | 13,000 | |||||||||
| Interest expense | 12,000 | |||||||||
| Income tax expense. | 29,000 | 582,000 | ||||||||
| Net income.. | $63,000 | |||||||||
| WOLFF COMPANY | ||||||||||
| Balance Sheets | ||||||||||
| Dec. 31, | Dec. 31, | |||||||||
| 2016 | 2015 | |||||||||
| Assets | ||||||||||
| Cash. | $52,000 | $8,000 | ||||||||
| Accounts receivable. | 41,000 | 32,000 | ||||||||
| Inventory.. | 90,000 | 60,000 | ||||||||
| Prepaid insurance. | 5,000 | 7,000 | ||||||||
| Plant assets. | 219,000 | 195,000 | ||||||||
| Accumulated depreciation. | (68,000) | (55,000) | ||||||||
| Total assets. | $339,000 | $247,000 | ||||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Accounts payable.. | $7,000 | $10,000 | ||||||||
| Wages payable. | 9,000 | 6,000 | ||||||||
| Income tax payable.. | 6,000 | 7,000 | ||||||||
| Bonds payable.. | 141,000 | 75,000 | ||||||||
| Common stock.. | 90,000 | 90,000 | ||||||||
| Retained earnings. | 86,000 | 59,000 | ||||||||
| Total liabilites and stockholders' equity. | $339,000 | $247,000 | ||||||||
| Cash dividends of $36,000 were declared and paid during 2016. Plant assets were purchased for cash and bonds payable were issued for cash. Bond interest is paid semi-annually on June 30 and December 31. Accounts payable relate to merchandise purchases. | ||||||||||
| a. Calculate the change in cash that occurred during 2016. | ||||||||||
| b. Prepare a statement of cash flows using the indirect method. | ||||||||||
| Parts C through E will not be graded, but are good practice. | ||||||||||
| c. Compute free cash flow. | ||||||||||
| d. Compute the operating-cash-flow-to-current-liabilities ratio. | ||||||||||
| e. Compute the operating-cash-flow-to-capital-expenditures ratio. | ||||||||||
| a. | Cash, Dec. 31, 2016 | |||||||||
| - Cash, Dec. 31, 2015 | ||||||||||
| Change in cash | ||||||||||
| b. | WOLFF COMPANY | |||||||||
| Statement of Cash Flows | ||||||||||
| For Year Ended December 31, 2016 | ||||||||||
| Cash flow from operating activities | ||||||||||
| Net income | ||||||||||
| Add (deduct) items to convert net income to cash basis | ||||||||||
| Cash provided by operating activities | 38,000 | |||||||||
| Cash flow from investing activities | ||||||||||
| Cash flow from financing activities | ||||||||||
| Cash provided by financing activities | 30,000 | |||||||||
| Net increase in cash | 44,000 | |||||||||
| Cash at beginning of year | ||||||||||
| Cash at end of year | ||||||||||
| c. | Free cash flow = | Not graded | ||||||||
| d. | Operating-cash-flow-to-current-liabilities ratio = | Not graded | ||||||||
| e. | Operating-cash-flow-to-capital-expenditures ratio = | Not graded | ||||||||
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A Textbook Of Cost And Management Accounting
Authors: Arora
10th Edition
9789325956209
