Answered step by step
Verified Expert Solution
Question
1 Approved Answer
The following data are provided for John Mean Corporation. Balance Sheet (December 31) 2019 2020 Cash $ 68,000 $ 69,000 A/R 24,000 34,000 Inventory 32,000
The following data are provided for John Mean Corporation.
Balance Sheet (December 31)
2019 2020
Cash $ 68,000 $ 69,000
A/R 24,000 34,000
Inventory 32,000 28,000
Investment (LT) 12,000 0
Fixed assets 160,000 186,000
Acc. Depreciation (96,000) (78,000)
Total assets $200,000 $239,000
A/P $ 38,000 $ 24,000
B/P 20,000 40,000
C/S 100,000 122,000
R/E 42,000 56,000
Treasury stock 0 (23,000)
Additional data for the period January 1, 2020 through December 31, 2020 are:
- Sales on account, $140,000.
- Purchases on account, $80,000.
- Depreciation, $10,000.
- Expenses paid in cash, $36,000 (including $8,000 of interest and $12,000 in taxes).
- Decrease in Inventory, $4,000.
- Disposition of fixed assets for $12,000 cash; cost $42,000 and two-thirds depreciated (loss or gain is included in income).
- Acquisition of fixed assets for cash $8,000.
- Fixed assets are exchanged for bonds payable of $60,000.
- Disposition of investments for $18,000 cash.
- Purchase of treasury stock for cash, $23,000.
- Retire B/P by issuing C/S, $20,000.
- Collections on A/R, $130,000.
- Sold unused C/S for cash, $2,000.
Required:
- Prepare a statement of cash flows using the INDIRECT method. (16 marks)
- Prepare CFO using the DIRECT method. (7 marks)
- Prepare an income statement for the year, 2020. (7 marks)
- Which of these two statements, CFO or I/S better reflects profitability? Explain. (4 marks)
- Suppose 50% of cash is operating. Calculate the change in NOA. (6 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started