Question
Statement of Cash Flows (Indirect Method) The Wolff Company's income statement and comparative balance sheets at December 31 of 2013 and 2012 are shown below:
Statement of Cash Flows (Indirect 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 | $889,000 | |
Cost of Goods Sold | $602,000 | |
Wages Expense | 120,400 | |
Insurance Expense | 11,200 | |
Depreciation Expense | 23,800 | |
Interest Expense | 12,600 | |
Income Tax Expense | 40,600 | 810,600 |
Net Income | $78,400 |
WOLFF COMPANY Balance Sheets | ||
---|---|---|
Dec. 31, 2013 | Dec. 31, 2012 | |
Assets | ||
Cash | $15,400 | $7,000 |
Accounts Receivable | 57,400 | 44,800 |
Inventory | 126,000 | 84,000 |
Prepaid Insurance | 7,000 | 9,800 |
Plant Assets | 350,000 | 273,000 |
Accumulated Depreciation | (95,200) | (71,400) |
Total Assets | $460,600 | $347,200 |
Liabilities and Stockholders' Equity | ||
Accounts Payable | $9,800 | $14,000 |
Wages Payable | 12,600 | 8,400 |
Income Tax Payable | 9,800 | 11,200 |
Bonds Payable | 182,000 | 105,000 |
Common Stock | 126,000 | 126,000 |
Retained Earnings | 120,400 | 82,600 |
Total Liabilities and Stockholders' Equity | $460,600 | $347,200 |
Cash dividends of $40,600 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 $Answer AnswerIncreaseDecrease
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 | ||
Net Income | Answer | |
Add (deduct) items to convert net income to cash basis | ||
Depreciation | Answer | |
Accounts Receivable | AnswerIncreaseDecrease | Answer |
Inventory | AnswerIncreaseDecrease | Answer |
Prepaid Insurance | AnswerIncreaseDecrease | Answer |
Accounts Payable | AnswerIncreaseDecrease | Answer |
Wages Payable | AnswerIncreaseDecrease | Answer |
Income Tax Payable | AnswerIncreaseDecrease | Answer |
Cash Flow 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
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