Academic Integrity: tutoring, explanations, and feedback — we don’t complete graded work or submit on a student’s behalf.

*Exercise 5-16 A comparative balance sheet for Coronado Corporation is presented

ID: 2547212 • Letter: #

Question

*Exercise 5-16 A comparative balance sheet for Coronado Corporation is presented below December 31 Assets Cash Accounts receivable Inventory Land Equipment Accumulated Depreciation-Equipment 2017 2016 $ 72,880 22,000 84,590 182,590 73,590 262,590 (71,590(44,710 ) 68,710 191,710 112,710 202,710 Total Liabilities and Stockholders' Equity Accounts payable Bonds payable Common stock ($1 par) Retained earnings $604,650 $553,130 $ 36,590 $49,710 200,000 164,000 139,420 $604,650 $553,130 150,000 214,000 204,060 Total Additional information: 1. Net income for 2017 was $130,180. No gains or losses were recorded in 2017. 2. Cash dividends of $65,540 were declared and paid. 3. Bonds payable amounting to $50,000 were retired through issuance of common stock.

Explanation / Answer

Coronado corporation

Statement of cash flows for the year ended 2017

Issue of common stock to retire $50000 bonds is  non cash investing and financing activities .

Free cash flows = $137180 - $59880 - $65540

= $11760.

Current cash debt coverage = Net cash provided by operating activities / average current liabilities

= $137180 / ($36590 + $49710)/2

= $137180 / $43150

= 3.18 times.

Particulars Amount($) Cash flows from operations Net income $130180 Depreciation $26880 Increase in accounts receivable ($15880) Decrease in inventory $9120 Decrease in accounts payable ($13120) Net cash flows from operating activities $137180 Cash flows from investing activities Sale of land $39120 Purchase of equipment ($59880) Net cash flows from investing activities $116420 Cash flows from financing activities Dividend paid ($65540) Net cash flows from financing activities $50880 Beginning cash balance $22000 Ending cash balance $72880.