Whispering Winds Inc. had the following statement of financial position at the e
ID: 2542855 • Letter: W
Question
Whispering Winds Inc. had the following statement of financial position at the end of operations for 2016:
$194,200
During 2017, the following occurred:
At December 31, 2017, Cash was $70,200; Accounts Receivable was $42,000; and Accounts Payable was $40,000.
A) Prepare the statement of financial position as it would appear at December 31, 2017. (List Assets in order of liquidity.)
WHISPERING WINDS INC.
Statement of Financial Position
Date:
ASSETS
_________
_________
__________
__________
Total__________
Liabilities and Shareholders’ Equity
_________
_________
__________
__________
Total ______
B) Prepare a statement of cash flows for the year ended December 31, 2017 using the indirect method. Assume dividends paid are treated as financing activities. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
WHISPERING WINDS INC.
Statement of Cash Flows
Date:
C) Calculate the current and acid test ratios for 2016 and 2017. (Round answers to 2 decimal places, e.g. 52.75.)
2017
Current ratio_____
Acid test ratios______
2016
Current ratio_______
Acid test ratios______
D) Calculate Aero’s free cash flow and the current cash debt coverage ratio for 2017. (Round current cash debt coverage ratio to 2 decimal places, e.g. 52.75. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Free cash flow________
Current cash debt coverage ratio__________
WHISPERING WINDS INC.Statement of Financial Position
December 31, 2016 Cash $20,000 Accounts payable $30,000 Accounts receivable 21,200 Bonds payable 41,000 FV-NI investments 32,000 Common shares 100,000 Equipment (net) 81,000 Retained earnings 23,200 Land 40,000 $194,200
$194,200
Explanation / Answer
Statement of financial position
Assets
A
cash
70200
accounts receivables
42000
total of current assets
112200
land = (40000+48000+60000)
148000
equipment =81000-12000
69000
total of assets
112200
Liabilities and shareholders equity
accounts payable
40000
bonds payable =(41000+60000)
101000
total of liabilities
141000
common stock = (100000+48000)
148000
retained earnings =23200+31000-14000
40200
total of shareholders equity
188200
total of Liabilities and shareholders equity
329200
B-
statement of cash flow
net income
31000
add depreciation
12000
add loss on sale of investment
9000
increase in accounts receivable
-20800
increase in accounts payable
10000
cash flow from operating activities
41200
cash flow from investing activities
cash from sale of investment
23000
purchase of land
-48000
cash flow from investing activities
-25000
cash flow from financing activities
cash from issuance of share
48000
34000
payment of dividend
-14000
cash flow from operations
50200
beginning balance of cash
20000
year end cash balance
70200
C-
2017
2016
current ratio
current assets/current liabilities
2.805
1.373333
current assets
112200
41200
current liabilities
40000
30000
Acid test ratio
2017
2016
current ratio
quick assets /current liabilities
2.805
1.373333
current assets = quick assets
112200
41200
current liabilities
40000
30000
D-
Free cash flow
cash flow from operating activities-cash flow from investing activities
41200-25000
16200
Current cash debt coverage ratio
net cash from operating activities/average current liabilities
41200/35000
1.18
cash flow from operating activities
41200
average current liabilities
(40000+30000)/2
35000
Statement of financial position
Assets
A
cash
70200
accounts receivables
42000
total of current assets
112200
land = (40000+48000+60000)
148000
equipment =81000-12000
69000
total of assets
112200
Liabilities and shareholders equity
accounts payable
40000
bonds payable =(41000+60000)
101000
total of liabilities
141000
common stock = (100000+48000)
148000
retained earnings =23200+31000-14000
40200
total of shareholders equity
188200
total of Liabilities and shareholders equity
329200
B-
statement of cash flow
net income
31000
add depreciation
12000
add loss on sale of investment
9000
increase in accounts receivable
-20800
increase in accounts payable
10000
cash flow from operating activities
41200
cash flow from investing activities
cash from sale of investment
23000
purchase of land
-48000
cash flow from investing activities
-25000
cash flow from financing activities
cash from issuance of share
48000
34000
payment of dividend
-14000
cash flow from operations
50200
beginning balance of cash
20000
year end cash balance
70200
C-
2017
2016
current ratio
current assets/current liabilities
2.805
1.373333
current assets
112200
41200
current liabilities
40000
30000
Acid test ratio
2017
2016
current ratio
quick assets /current liabilities
2.805
1.373333
current assets = quick assets
112200
41200
current liabilities
40000
30000
D-
Free cash flow
cash flow from operating activities-cash flow from investing activities
41200-25000
16200
Current cash debt coverage ratio
net cash from operating activities/average current liabilities
41200/35000
1.18
cash flow from operating activities
41200
average current liabilities
(40000+30000)/2
35000
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