Walmart Company is the leading manufacturer and seller of sunglasses and formal
ID: 2484409 • Letter: W
Question
Walmart Company is the leading manufacturer and seller of sunglasses and formal wear for small pets. Its comparative balance sheet and income statement follows (dollars in billions)
The additional information available is that equipment costing $200 with accumulated depreciation of
$50 was sold for $50.
Required:- prepare the statement of cash flows using the indirect approach.
2014
2015
Cash
10
15
A/R
50
55
Inventory
80
70
Prepaid insurance
10
12
Land
40
60
PP&E
200
280
Accumulated depreciation
(100)
(120)
Deferred Tax asset
180
484
Net intangible Assets
70
55
Total asset
540
911
Accounts payable
30
35
Unearned revenue
10
5
Notes payable
100
120
Interest payable
8
12
Bonds payable
100
100
Discount on bonds payable
(6)
(4)
Total liabilities
242
268
Common stock
10
804
APIC
900
900
Retained earnings
(612)
(1061)
Total stockholder’s equity
298
643
Total liabilities and stockholder’s equity
540
911
Sales revenue
10
COGS
220
Gross profit(loss)
(210)
Salary expense
300
Insurance expense
30
Depreciation expense
70
Interest expense
28
Amortization expense
15
Loss on sale of equipment
100
Profit (loss) before income tax
(753)
Income tax benefit
304
Net income(loss)
(449)
2014
2015
Cash
10
15
A/R
50
55
Inventory
80
70
Prepaid insurance
10
12
Land
40
60
PP&E
200
280
Accumulated depreciation
(100)
(120)
Deferred Tax asset
180
484
Net intangible Assets
70
55
Total asset
540
911
Explanation / Answer
Cash flows from operating activities Net income -449 Adjustments for: Depreciation and amortization 85 Loss on sale of equip 100 185 Increase in acc receivables -5 Decrease in inventories 10 Increase in prepaid ins -2 inc in ap 5 Dec in unearned revneu -5 inc in notes payable 20 inc in int payable 4 27 Cash generated from operations -237 Cash flows from investing activities Sale of Equip 50 Purchas of land -20 Purchas of PPE -80 Net cash used in investing activities -50 Cash flows from financing activities Proceeds from issue of common stock 292 Proceeds from issuance of long-term debt Dividends paid Net cash used in financing activities 292 Net increase in cash and cash equivalents 5 Cash and cash equivalents at beginning of period 10 Cash and cash equivalents at end of period 15
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