P1-4B Presented below are selected financial items for Preacher Corporation for
ID: 2415095 • Letter: P
Question
P1-4B
Presented below are selected financial items for Preacher Corporation for December 31, 2014.
Inventory $55,000, Cash paid to suppliers 154,000, Buildings 400,000, Common Stock 20,000, Cash dividends paid 2,000, Cash at beginning of period 11,000, Cash paid to purchase equipment $20,000, Equipment 40,000, Service revenue 200,000, Cash received from customers 162,000, Cash received from issuing bonds payable 40,000. Instructions (a) Determine which items should be included in a statement of cash flows, and prepare the statements for Preacher Corporation. (b) Comment on the adequacy of net cash provided by operating activities to fund the company's investing activities and dividend payment
Explanation / Answer
a) statement of Cash flows
b) The company is not working effeciently as cash flow from operating activities is not sufficient to pay dividend and made investments therefore company has to issue bonds for its expansion thus the adequacy of net cash provided by operating activities is very low or not so good.
Particulars Amount Cash From operating activities cash received from Customers 162,000 Cash paid to suppliers - 154,000 Cash flow from Operating activities 8,000 Cash From Investing activities Purchase of equipment - 20,000 Cash Used in Investing activities - 20,000 Cash from Financing activities Dividend paid - 2,000 Issue of Bonds 40,000 Cash Flow from Financing Activities 38,000 Net change in Cash flow 26,000 Cash at begining 11,000 Cash at end 37,000Related Questions
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