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KURTZEL COMPANY Comparative Balance Sheets December 31 Assets 2014 2013 $ 83,440

ID: 2588087 • Letter: K

Question

KURTZEL COMPANY
Comparative Balance Sheets
December 31

Assets

2014

2013

$ 83,440

$ 47,680

47,680

33,376

66,752

47,680

143,040

185,952

(76,288

)

(57,216

)

$264,624

$257,472

Liabilities and Stockholders’ Equity

$ 45,296

$ 35,760

16,688

19,072

40,528

78,672

42,912

33,376

119,200

90,592

$264,624

$257,472

KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014

$576,928

417,200

159,728

$42,912

14,304

57,216

102,512

7,152

95,360

19,072

$ 76,288

Presented below are the financial statements of Kurtzel Company.

KURTZEL COMPANY
Comparative Balance Sheets
December 31

Assets

2014

2013

Cash

$ 83,440

$ 47,680

Accounts receivable

47,680

33,376

Inventory

66,752

47,680

Property, plant, and equipment

143,040

185,952

Accumulated depreciation

(76,288

)

(57,216

)

Total

$264,624

$257,472

Liabilities and Stockholders’ Equity

Accounts payable

$ 45,296

$ 35,760

Income taxes payable

16,688

19,072

Bonds payable

40,528

78,672

Common stock

42,912

33,376

Retained earnings

119,200

90,592

Total

$264,624

$257,472

KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014

Sales revenue

$576,928

Cost of goods sold

417,200

Gross profit

159,728

Selling expenses

$42,912

Administrative expenses

14,304

57,216

Income from operations

102,512

Interest expense

7,152

Income before income taxes

95,360

Income tax expense

19,072

Net income

$ 76,288


Additional data:
1. Depreciation expense was $41,720. 2. Dividends declared and paid were $47,680. 3. During the year equipment was sold for $20,264 cash. This equipment cost $42,912 originally and had accumulated depreciation of $22,648 at the time of sale.

Explanation / Answer

A) 1) Current cash debt coverage=Net cash provided by operating activities/Average current liabilities Net cash provided by operating activities: Net income 76288 Adjustments Depreciation expense 41720 Increase in accounts receivable (47680-33376) -14304 Increase in inventory (66752-47680) -19072 Increase in accounts payable (45296-35760) 9536 Decrease in income taxes payable (19072-16688) -2384 Cash provided by operating activities 91784 Current liabilities=Accounts payable+Income taxes payable Average current liabilities=[(35760+19072)+(45296+16688)]/2=58408 Current cash debt coverage=91784/58408=1.57 times 2) cash debt coverage=Net cash provided by operating activities/Average total liabilities Average total liabilities=(Beginning total liabilities+Ending total liabilities)/2 Total liabilities=Accounts payable+Income taxes payable+Bonds payable Average total liabilities=[(35760+19072+78672)+(45296+16688+40528)/2=118008 cash debt coverage=91784/118008=0.78 times 3) Free cashflow=Net cash provided by operating activities-Capital expenditures=91784-0-47680*=$44104 * Dividend paid