KURTZEL COMPANY Comparative Balance Sheets December 31 Assets 2014 2013 $ 83,440
ID: 2588087 • Letter: K
Question
KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
$ 83,440
$ 47,680
47,680
33,376
66,752
47,680
143,040
185,952
(76,288
)
(57,216
)
$264,624
$257,472
Liabilities and Stockholders’ Equity
$ 45,296
$ 35,760
16,688
19,072
40,528
78,672
42,912
33,376
119,200
90,592
$264,624
$257,472
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
$576,928
417,200
159,728
$42,912
14,304
57,216
102,512
7,152
95,360
19,072
$ 76,288
Presented below are the financial statements of Kurtzel Company.KURTZEL COMPANY
Comparative Balance Sheets
December 31
Assets
2014
2013
Cash$ 83,440
$ 47,680
Accounts receivable47,680
33,376
Inventory66,752
47,680
Property, plant, and equipment143,040
185,952
Accumulated depreciation(76,288
)
(57,216
)
Total$264,624
$257,472
Liabilities and Stockholders’ Equity
Accounts payable$ 45,296
$ 35,760
Income taxes payable16,688
19,072
Bonds payable40,528
78,672
Common stock42,912
33,376
Retained earnings119,200
90,592
Total$264,624
$257,472
KURTZEL COMPANY
Income Statement
For the Year Ended December 31, 2014
$576,928
Cost of goods sold417,200
Gross profit159,728
Selling expenses$42,912
Administrative expenses14,304
57,216
Income from operations102,512
Interest expense7,152
Income before income taxes95,360
Income tax expense19,072
Net income$ 76,288
Additional data:
1. Depreciation expense was $41,720. 2. Dividends declared and paid were $47,680. 3. During the year equipment was sold for $20,264 cash. This equipment cost $42,912 originally and had accumulated depreciation of $22,648 at the time of sale.
Explanation / Answer
A) 1) Current cash debt coverage=Net cash provided by operating activities/Average current liabilities Net cash provided by operating activities: Net income 76288 Adjustments Depreciation expense 41720 Increase in accounts receivable (47680-33376) -14304 Increase in inventory (66752-47680) -19072 Increase in accounts payable (45296-35760) 9536 Decrease in income taxes payable (19072-16688) -2384 Cash provided by operating activities 91784 Current liabilities=Accounts payable+Income taxes payable Average current liabilities=[(35760+19072)+(45296+16688)]/2=58408 Current cash debt coverage=91784/58408=1.57 times 2) cash debt coverage=Net cash provided by operating activities/Average total liabilities Average total liabilities=(Beginning total liabilities+Ending total liabilities)/2 Total liabilities=Accounts payable+Income taxes payable+Bonds payable Average total liabilities=[(35760+19072+78672)+(45296+16688+40528)/2=118008 cash debt coverage=91784/118008=0.78 times 3) Free cashflow=Net cash provided by operating activities-Capital expenditures=91784-0-47680*=$44104 * Dividend paid
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