ral years ago. Cash dividends totaling $31 were paid during Yea Required . Using
ID: 2434987 • Letter: R
Question
ral years ago. Cash dividends totaling $31 were paid during Yea Required . Using the indirect prepare a statement t method, determine the cash provided by operating activities for Year 2 n i (1) ahove, along with an analysis of the remaining balance sheet accounts, to of cash flows for Year 2 ppendix 13A) Prepare a Statement of Cash Flows (Direct Method) (LO2, ided byLO4) ities: 591 Refer to the financial statement data for Shores Inc, in Problem 13-14 Required methoxd, adjust the company's income statement for Year 2 to a cash basis. in (1) above, along with an analysis of the remaining balance sheet ac. counts, to prepare a statement of cash flows for Year 2 (Lo2, PROBLEM 13-16 LO3) Marisa Thalme l by Prepare and Interpret a Statement of Cash Flows (Indirect Method) r, president of Becker Products, considers $14.000 to be the minimum cash balance for op Pulposes. As can be seen from the statements below, only $3,000 in cash was available at the end company reported a large net income for the year, and also issued both bonds and of Year 2. Since the common stock, the sharp decline in cash is puzzling to Ms. Thalmer BECKER PRODUCTS Comparative Balance Sheet December 31, Year 2 and Year I Year 2 Year l Assets Current assets: Cash Accounts receivable. Inventory $3,000 20,00 08,000 22,000 82,000 85,000 8,000 197,000 5,000 Prepaid expenses Total current assets. 236,000 74,000 436,000 280,000 54,000 Long-term investments.... Plant and equipment Less accumulated depreciation Net plant and equipment. Total assets . . . . 50,000 230,000 $666,000 $501,000 60,000 376,000 . .. (continued)Explanation / Answer
Solution 13-16 1:
Solution 13-16-2:
Solution 13-16-3:
The major decline in company cash postion is due to company has made heavy capital expenditure of $181,000 in purchasing plant and equipment. Further though net income for the company is good but cash from operating activities is very less as funds are blocked in inventories and accounts receivable and significant increase in these heads are seen from previous years. These are the major reasons for decline in the company cash position.
Statement of Cash Flows (Partial) - Becker ProductsFor the year ended Dec 31, Year 2 Particulars Details Amount Cash Flow from Operating Activities: Net Income $31,000.00 Adjustments to reconcile net income to cash flow from operating activities: Depreciation ($60,000 - $50,000 + $18,000) $28,000.00 Gain on sale of investment -$10,000.00 Gain on sale of equipment -$3,000.00 Increase in Accounts Receivables ($120,000 - $82,000) -$38,000.00 Increase in Inventory ($108,000 - $85,000) -$23,000.00 Decrease in prepaid expenses ($8,000 - $5,000) $3,000.00 Increase in Accounts payable ($72,000 - $60,000) $12,000.00 Increase in accrued liabilities ($19,000 - $18,000) $1,000.00 Increase in deferred in income taxes ($12,000 - $10,000) $2,000.00 Total Adjustments -$28,000.00 Net Cash Flow From Operating Activites (A) $3,000.00
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