Use the financial statements for Theta Corp. and answer the questions below: a.
ID: 2644615 • Letter: U
Question
Use the financial statements for Theta Corp. and answer the questions below:
a. Summarize the firm's financing activities, calculate the changes in accounts and identify the uses and sources of cash.
b. Compute the Net Cash from Financing.
Theta Corp. Balance Sheet
Theta Corp. Income Statement
PLease I need the answer to be step by step
2012 2013 2012 2013 Current Assets Current Liabilities Cash $310,020 $367,904 Account Payable $300,000 $420,584 Account Receivable $408,000 $402,000 Notes Payable $543,000 $545,300 Inventory $100,000 $95,000 Total $843,000 $965,884 Total $818,020 $864,904 Long-term Debts $850,000 $920,000 Net Fixed Assets Net plant and equipment $2,000,000 $2,150,000 Common Stock and Paid-in Surplus $843,000 $834,000 Total $2,000,000 $2,150,000 Retained earnings $282,020 $295,020 Total Assets $2,818,020 $3,014,904 Total Liabilities and Owners' Equity $2,818,020 $3,014,904Explanation / Answer
(a)
Financing Activities -
(1) Interest Expense (Cash Outflow) = $43,400
(2) Dividend Paid = $ 45,100
(3) Reduction in Common Stock means Stock buyback of $ 9,000
(4) Increase in Long term Debt = $ 700,000
Changes in Accounts:
(1) Current Assets = Increase $ 46,884 (Source) Out of which
- Cash = Increase $ 57,884 (Source)
- Account Receivable = Decrease (Use) $ 6,000
- Inventory = Decrease (Use) $5,000
(2) Current Liabilities = Increase $ 122,884 (Use), out of which
- Acc Payable = Increase $ 120,584 (Use)
- Notes Payable = Increase $ 2300 (Use)
(3) Net Fixed Assets (Non-Current Assets) = Increase $ 150,000
(4) LT Debt (Non-Current Liability) = Increase $ 70,000
(b)
Net Cash from Financing = Increase in LT Debt - Interest Expense - Dividend Paid - Stock Buyback
= $ (70,000 - 43,400 - 45,100 - 9,000) = $ 27,500 Net OUTFLOW
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