A comparative balance sheet for Oprah Winfrey Company is presented below.

\section*{Additional information:}
1. Net income for 1996 was \(\$ 105,000\).
2. Cash dividends of \(\$ 40,000\) were declared and paid.
3. Bonds payable amounting to \(\$ 50,000\) were redeemed for cash \(\$ 50,000\).
4. Common stock was issued for \(\$ 50,000\) cash.
5. Sales for 1996 are \(\$ 978,000\).
\section*{Instructions}

(a) Prepare a statement of cash flows for 1996 using the indirect method.

(b) Compute the following cash-basis ratios:
(1) Current cash debt coverage ratio.
(2) Cash return on sales ratio (3) Cash debt coverage ratio.

Transcribed Image Text:

December 31 Assets 1996 1995 Cash $ 63,000 $ 22,000 Accounts receivable 85,000 76,000 Inventories Land Equipment 180,000 189,000 75,000 100,000 260,000 200,000 Accumulated depreciation Total Liabilities and Stockholders' Equity (66,000) (42,000) $597,000 $545,000 Accounts payable Bonds payable Common stock ($1 par) Retained earnings Total $ 34,000 $ 47,000 150,000 200,000 214,000 164,000 199,000 134,000 $597,000 $545,000