Statement of Cash Flows (Direct Method)

The Wolff Company's income statement and comparative balance sheets at December 31 of 2013 and 2012 are shown below:

WOLFF COMPANY Income Statement For the Year Ended December 31, 2013

Sales Revenue $698,500

Cost of Goods Sold $473,000

Wages Expense 94,600

Insurance Expense 8,800

Depreciation Expense 18,700

Interest Expense 9,900

Income Tax Expense 31,900 636,900

Net Income $61,600

WOLFF COMPANY

Balance Sheets Dec. 31, 2013 Dec. 31, 2012

Assets Cash $12,100 $5,500

Accounts Receivable 45,100 35,200

Inventory 99,000 66,000

Prepaid Insurance 5,500 7,700

Plant Assets 275,000 214,500

Accumulated Depreciation (74,800) (56,100)

Total Assets $361,900 $272,800

Liabilities and Stockholders' Equity

Accounts Payable $7,700 $11,000

Wages Payable 9,900 6,600

Income Tax Payable 7,700 8,800

Bonds Payable 143,000 82,500

Common Stock 99,000 99,000

Retained Earnings 94,600 64,900

Total Liabilities and Stockholders' Equity $361,900 $272,800

Cash dividends of $31,900 were declared and paid during 2013. 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.

Required

a. Calculate the change in cash that occurred during 2013.

b. Prepare a statement of cash flows using the indirect method.

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. Change in Cash during 2013

b. Use a negative sign with cash outflow answers.

WOLFF COMPANY Statement of Cash Flows For Year Ended December 31, 2013

Cash Flow from Operating Activities

Cash Received from Customers Answer

Cash paid for Merchandise Purchased Answer

Cash Paid to Employees Answer

Cash Paid as Insurance Answer

Cash Paid for Interest Answer

Cash Paid as Income Taxes Answer Answer

Cash Provided by Operating Activities Answer

Cash Flow from Investing Activities

Purchase of Plant Assets Answer

Cash Flow from Financing Activities

Issuance of Bonds Payable Answer

Payment of Dividends Answer

Cash Provided by Financing Activities Answer

Net Change in Cash Answer

Cash at Beginning of Year Answer

Cash at End of Year Answer

c. Free cash flow $ Answer

d. Operating-cash-flow-to-current-liabilities ratio.

Round answer to two decimal places. Answer

e. Operating-cash-flow-to-capital-expenditures ratio. Round answer to two decimal places. Answer