SCHMITT COMPANY Comparative Balance Sheets December 31 Assets 2014 2013 $ 34,680
ID: 2489390 • Letter: S
Question
SCHMITT COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
$ 34,680
$ 11,220
44,880
38,760
85,170
96,390
40,800
51,000
132,600
102,000
(33,660
)
(16,320
)
$304,470
$283,050
Liabilities and Stockholders’ Equity
$ 19,890
$ 21,930
76,500
102,000
110,160
88,740
97,920
70,380
$304,470
$283,050
A. Prepare a statement of cash flows for 2014 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000)).
B. Compute these cash-based ratios: (Round ratios to 2 decimal places, e.g. 2.56.)
(1) Current cash debt coverage.
SCHMITT COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
Cash$ 34,680
$ 11,220
Accounts receivable44,880
38,760
Inventory85,170
96,390
Land40,800
51,000
Equipment132,600
102,000
Accumulated depreciation—equipment(33,660
)
(16,320
)
Total$304,470
$283,050
Liabilities and Stockholders’ Equity
Accounts payable$ 19,890
$ 21,930
Bonds payable76,500
102,000
Common stock ($1 par)110,160
88,740
Retained earnings97,920
70,380
Total$304,470
$283,050
Additional information:
1. Net income for 2014 was $47,430. 2. Depreciation expense was $17,340. 3. Cash dividends of $19,890 were declared and paid. 4. Bonds payable amounting to $25,500 were redeemed for cash $25,500. 5. Common stock was issued for $21,420 cash. 6. No equipment was sold during 2014. 7. Land was sold for its book value.
Explanation / Answer
2./
CURRENT CASH DEBT COVERAGE
= CASH FLOW FROM OPERATING ACTIVITY / AVERAGE CURRENT LIBALITY
= $67830 / [($21930 + 19890) / 2]
= $67830 / $20910
= 3.24 TIMES
CASH DEBT COVERAGE RATIO
= CASH FLOW FROM OPERATING ACTIVITY / AVERAGE TOTAL LIBALITY
= $67830 / [($21930 + $ 102000 + $19890 + $76500) / 2]
= $67830 / $110160
= 0.62 TIMES
DETAILS AMOUNT AMOUNT NET INCOME $47430 ADD DEPERICATION $17340 LESS INCEREASE IN ACCOUNTS RECEIVABLE ($6120) ADD DECEREASE IN INVENTORY $11220 LESS DECEREASE IN ACCOUNTS PAYABLE ($2040) CASH FLOW FROM OPERATING ACTIVITY $67830 CASH FLOW FROM INVESTING ACTIVITY SALE OF LAND $10200 PURCHASE OF EQUIPEMENT ($30600) ($20400) CASHFLOW FROM FINANCING ACTIVITY CASH DIVIDEND PAID ($19890) BONDS PAYABLE REDEMED ($25500) COMMON STOCK ISSUED $21420 ($23970) NET CASH FLOW $23460 BEGINNING CASH BALANCE $11220 ENDING CASH BALANCE $34680Related Questions
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