Please help me with this problem. Thank you. Presented below are the financial s
ID: 2448330 • Letter: P
Question
Please help me with this problem. Thank you.
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 39,944
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.
b) 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
Pls note that in 2013 liabilities & equity data has a mistake of $5000. It is very painful to match cashflow if such errors are there. Pls correct the mistake in appropriate place. After that put the data in the raio for getting ratio.
Pls take care to avoid such errros
KURTZEL COMPANY CASH FLOW STATEMENT Oprating Cash Flow Amt $ Income before Tax 107,328 Add back Depreciation 43,680 Interest Paid (7,488) Income Tax paid=19968-17472+19968 (22,464) Change in Working Capital Increase in Accounts Receivable (14,976) Increase In Inventory (19,968) Increase in Accounts Payable 9,984 Cash Flow from Opearing Activities 96,096 Cash Flow from InvestingActivities Change in Fixed Asset 21,216 Total Investing Cash Flow 21,216 Financing Activities Bonds Payable (39,936) Dividend Paid (49,920) Issue Of common stock 4,984 Total financing Cash Flow (84,872) Add : Mistake in 2013 BS data for laiblities 5,000 showing $5000 more than $269,568 Total Change in cash Flow 37,440 Opening Cash 49,920 Change in cash Flow 37,440 Closing Cash 87,360 As the exact type mistake in data not traceable , it is not possible to determine the exact ratio. Giving the formula , pls correct the data and put corrected data in the formula Current Cash Debt Coverage = Net cash by Operating Activities/ Avergae Current Liabilities (pls make average of two years current liabilities) Cash Debt Coverage = Net Cash by Opearting Activities/ Average Total Liabilities Free cash Flow= Operationg Cash Flow less Investing cash flowRelated Questions
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