Can someone help with this problem, please? Presented below are the financial st
ID: 2448278 • Letter: C
Question
Can someone help with this problem, please?
Presented below are the financial statements of Kurtzel Company.
KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
Cash
$ 87,360
$ 49,920
Accounts receivable
49,920
34,944
Inventory
69,888
49,920
Property, plant, and equipment
149,760
194,688
Accumulated depreciation
(79,872
)
(59,904
)
Total
$277,056
$269,568
Liabilities and Stockholders’ Equity
Accounts payable
$ 47,424
$ 37,440
Income taxes payable
17,472
19,968
Bonds payable
42,432
82,368
Common stock
44,928
34,944
Retained earnings
124,800
94,848
Total
$277,056
$269,568
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
Sales revenue
$604,032
Cost of goods sold
436,800
Gross profit
167,232
Selling expenses
$44,928
Administrative expenses
14,976
59,904
Income from operations
107,328
Interest expense
7,488
Income before income taxes
99,840
Income tax expense
19,968
Net income
$ 79,872
Additional data:
1.
Depreciation expense was $43,680.
2.
Dividends declared and paid were $49,920.
3.
During the year equipment was sold for $21,216 cash. This equipment cost $44,928 originally and had accumulated depreciation of $23,712 at the time of sale.
Prepare a statement of cash flows 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).)
KURTZEL COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
$
Adjustments to reconcile net income to
$
$
.
Compute these cash-based measures: (Round ratios to 2 decimal places, e.g. 2.56.)
(1)
Current cash debt coverage.
times
(2)
Cash debt coverage.
times
(3)
Free cash flow.
$
Explanation / Answer
Beginning Cash $ 49,920.00 Operating Cashflows: Operating Income $ 79,872.00 Depreciation $ 43,680.00 Increased Accounts Receivable $ (14,976.00) Increased Inventory $ (19,968.00) Increase in Accounts Payable $ 9,984.00 Decreased Income Tax payable $ (2,496.00) Decreased Bonus payable $ (39,936.00) Operating Cash $ 56,160.00 Cash from Investing Activities: Sale of Land $ 21,216.00 Total Cash from Investing activities $ 21,216.00 Cash from Financing Activities: Dividend Paid $ (49,920.00) Issue of Common Stock $ 9,984.00 Total Cash from Financing Activities $ (39,936.00) Ending Cash Balance $ 87,360.00 Cash Debt Coverage Ending Cash $ 87,360.00 Debt: Accounts Payable $ 47,424.00 Income Tax payable $ 17,472.00 Bonds Payable $ 42,432.00 Total Debt $ 107,328.00 Current Debt coverage (107328/87360) $ 1.23 Cash Debt Coverage Ratio (107328/((87360+49920)/2) $ 1.56 Free cash flows (Cash from operation) $ 56,160.00
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