Exercise 12-8 SCHMITT COMPANY Comparative Balance Sheets December 31 Assets 2014
ID: 2485693 • Letter: E
Question
Exercise 12-8
SCHMITT COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
$ 159,120
$ 51,480
205,920
177,840
390,780
442,260
187,200
234,000
608,400
468,000
(154,440
)
(74,880
)
$1,396,980
$1,298,700
Liabilities and Stockholders’ Equity
$ 91,260
$ 100,620
351,000
468,000
505,440
407,160
449,280
322,920
$1,396,980
$1,298,700
SCHMITT COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2014
Adjustments to reconcile net income to
Open Show Work
Exercise 12-8
Shown below are comparative balance sheets for Schmitt Company.SCHMITT COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
Cash$ 159,120
$ 51,480
Accounts receivable205,920
177,840
Inventory390,780
442,260
Land187,200
234,000
Equipment608,400
468,000
Accumulated depreciation—equipment(154,440
)
(74,880
)
Total$1,396,980
$1,298,700
Liabilities and Stockholders’ Equity
Accounts payable$ 91,260
$ 100,620
Bonds payable351,000
468,000
Common stock ($1 par)505,440
407,160
Retained earnings449,280
322,920
Total$1,396,980
$1,298,700
Additional information:
1. Net income for 2014 was $217,620. 2. Depreciation expense was $79,560. 3. Cash dividends of $91,260 were declared and paid. 4. Bonds payable amounting to $117,000 were redeemed for cash $117,000. 5. Common stock was issued for $98,280 cash. 6. No equipment was sold during 2014. 7. Land was sold for its book value.
Explanation / Answer
2)
Current cash debt coverage
= net cash provided by operating activites / average current liabilities
= $311220 /($ (91260+100620)/2)
= 3.24
2) Cash debt coverage
= Cash flow from operating activities / average total liabilities
= $311220 / ($(442260+568620)/2)
= 0.62
Net Income $ 2,17,620.00 Adjsutment to reconcile net income to operating cash flow Depreciation $ 79,560.00 Decrease in inventory $ 51,480.00 Increase in accounts receivable $ -28,080.00 Decrease in accounts payable $ -9,360.00 Net cash provided by operating activites $ 3,11,220.00 Investing activites Sale of land $ 46,800.00 Purchase of equipment $ -1,40,400.00 Net cash used in investing activites $ -93,600.00 Financing activities Issue of common stock $ 98,280.00 Redemption of bond $ -1,17,000.00 Payment of dividend $ -91,260.00 Net cash used in financing activites $ -1,09,980.00 Increase in cash $ 1,07,640.00 Add: Dec 31, 2013 balance $ 51,480.00 Dec 31, 2014 Balance $ 1,59,120.00Related Questions
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