The income statement and additional data of Four Season, Inc., follow (Click the
ID: 2559876 • Letter: T
Question
The income statement and additional data of Four Season, Inc., follow (Click the icon to view the income statement.) (Click the icon to view the additional data.) Requirements 1. Prepare Four Season, Inc.'s statement of cash flows and accompanying schedule of noncash investing and financing activities. Report operating activities by the direct method. 2. Evaluate Four Season's cash flows for the year. In your evaluation, mention all three categories of cash flows and give the reason for your evaluation Four Season, Inc. Statement of Cash Flows (Direct Method) Year Ended April 30, 2016 Additional data: a. Colections from customers are $15,000 less than sales b. Payments to suppliers are $1,400 less than the sum of cost of goads sold plus Cash flows from operating activities Recelpis advertising expens c. Payments to employees are $1.700 less than salary expense. d. Dividend revenue, interest expense, and income tax expense equal their cash Collections from customers 257 Collection of dividend revenue 11,500 amounts e. Acquisition of plant assets is $2110DD. Of this amount, S$151,000 is paid in cash Total cash receipts 268500 and $60,000 by signing a long-tem note payable f. Proceeds from sale ot land total $27,000. g. Proceeds from issuance of common stock total $78,000 h. Payment of a long-term note payable is S14,000. i. Payment of dividends is $9,500 Payments: To suppliers To employees For income tax For interest $(110,600) (51700) (9,000) L Cash balanceApnl 30, 2015, was $27,000 Total cash payments 95100 Four Season, Inc. Income Statement Year Ended April 30, 2016 Net cash provided by (used for) operating activities Sales revenue S 242,000 Dividend revenue S 253,500 Expenses: Cost of goods sold Salary expense Depreciation expense Advertising expense Interest expense Income tax expense 102,000 50,000 30.00D 0.000 2,100 9,000 203,100 S 50,400 Net incomeExplanation / Answer
Collection from Customers = $15,000 less than Sales.
= Sales - $15,000
= $242,000 - $15,000
Collection from Customers = $227,000
Payment to employees = $1700 less than Salary expense
= Salary - $1700
= $50,000 - $1700
Payment to employees = $48,300
All your answers are correct as I can see except two, above two are correct.
Cash flow from Investing Activities
= Sale of Land - Cash paid for Plant
= $27,000 - $151,000
Cash flow Used Investing Activities= ($124,000)
Cash flow from financing Activities
= Issuance of Common Stock – payment of long term note – Payment of Dividend
= $78,000 - $14,000 - $9,500
Cash flow from financing Activities = $54,500
After seeing CFS, the cash flow from Operating activities are Negative, which is not good for any business as these are the main activities of business in which the business deals, so company needs to improve this ASAP
Cash flow Investing Activities is negative which means the company is investing in Fixed assets which will generate future business which is good for any business organization.
Cash flow financing Activities is Positive which means the company is taking money from outside which is good and bad both as Good in the sense that it will decrease Tax liability and bad that company debt is rising so company needs to keep a close attention on this
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