1. See the attached financial statements for Torres,Inc. Prepare a cash flow sta
ID: 2569433 • Letter: 1
Question
1. See the attached financial statements for Torres,Inc. Prepare a cash flow statement using the indirect method.
Torres, Inc Balance Sheet (in thousands)
Assets 12/31/18 12/31/17
Current Assets:
Cash $36.00 $33.00
Accounts Recv. $46.00 $41.00
Merch. Inventory $53.00 $59.00
Total $135.00 $133.00
Noncurrent Assets
Plant and equipment $472.00 $460.00
Less accum depr. -$218.00 -$214.00
Total $254.00 $246.00
Total Assets $389.00 $379.00
Liab. & Shareholders Equity
Current Liab: 12/31/18 12/31/17
Accounts Payable $52.00 $62.00
Total $52.00 $62.00
L-T Liabilities:
Notes Payable $289.00 $330.00
Shareholders Equity:
Captial Stock $84.00 $80.00
Retained Earnings -$36.00 -$93.00
Total $48.00 -$13.00
Total Liab & S/H Equity $389.00 $379.00
Sales DOS: 12/31/17 $737.00
Cost of goods sold DOS: 12/31/17 $454.00
Gross margin DOS: 12/31/17 $283.00
Selling and administrative expense DOS: 12/31/17 $173.00
Net operating income DOS: 12/31/17 $110.00
Income taxes DOS: 12/31/17 $33.00
Net income DOS: 12/31/17 $77.00
Explanation / Answer
UNDER INDIRECT METHOD Statement of Cash Flows FOR THE YEAR END Amount in $ Amount in $ Net income $ 77.00 Cash flows from operating activities Adjustments for non Cash Effects: Depreciation $ 4.00 $ 4.00 Changes in Current Operating Assets and Liaibilities (Increase) / Decrease in Account receivables $ -5.00 Inventory Decrease / (Increase) $ 6.00 Accounts payable Increase / ( Decrese) $ -10.00 $ -9.00 Net cash from operating activities $ 72.00 Cash flows from investing activities Plant and equioment $ -12.00 Net cash used in investing activities $ -12.00 Cash flows from Financing activities Issue of Capital Stock $ 4.00 Dividend Paid $ -20.00 Note Payable $ -41.00 Net cash used in financing activities $ -57.00 Net increase in cash and cash equivalents $ 3.00 Add :Cash and cash equivalents at beginning of period $ 33.00 Cash and cash equivalents at end of period $ 36.00 CALCULATION OF DIVIDEND PAID IN THE YEAR 2017 Opening Retained Earning $ -93.00 Add: Revenue for the year = $ 77.00 Closing revenue retained Earning $ -16.00 Less: Actual Retained Earnings. $ -36.00 Difference $ 20.00
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