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    inquiringmind10 Posts: 12, Reputation: 1
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    #1

    Feb 24, 2010, 04:06 AM
    help me with completing a statement of cash flows
    I really need hep with this one. I need to complete a cash flow statement using the indirect method.

    Balance sheets and income statement follow:
    TRAHAN COMPANY
    Comparative Balance Sheets
    December 31
    2010 2009
    Assets
    Cash.. . 38,000 20,000
    Accounts receivable.. . 33,000 14,000
    Merchandise inventory.. . 27,000 20.000
    Property, plant, and equipment.. . 60,000 78,000
    Accumulated depreciation.. . (32,000) (24,000)
    Total assets.. . 126,000 108,000
    Liabilities and Equity
    Accounts payable.. . 24,000 15,000
    Income taxes payable.. . 7,000 8,000
    Bonds payable.. . 27,000 33,000
    Common stock.. . 18,000 14,000
    Retained earnings.. . 50,000 38,000
    Total liabilities and equity.. . 126,000 108,000
    TRAHAN COMPANY
    Income Statement
    For Year Ended December 31, 2010
    Sales.. . 242,000
    Cost of goods sold.. . 175,000
    Gross profit.. . 67,000
    Selling expenses.. . 18,000
    Administrative expenses.. . 6,000 24,000
    Income from operations.. . 43,000
    Interest expense.. . 3,000
    Income before taxes.. . 40,000
    Income tax expense.. . 8,000
    Net income.. . 32,000

    Additional Information:

    1. Dividends declared and paid were 29,000 cash.
    2. During the year equipment was sold for 8,500 cash. This equipment cost 18,000 originally and had a book value of 8,500 at the time of sale.
    3. All depreciation expense is in the selling expense category.
    4. All sales and purchases are on account.
    inquiringmind10's Avatar
    inquiringmind10 Posts: 12, Reputation: 1
    New Member
     
    #2

    Feb 24, 2010, 08:28 AM

    Adjustments to reconcile net income to net
    cash provided by operating activities
    Depreciation expense $14,500
    Increase in account receivable (19,000)
    Increase in inventory (7,000)
    Increase in accounts payable 14,000
    Decrease in tax payable (1,000) 1,500
    Net cash provided by operating activities $33,500
    Cash flows from investing activities
    Sale of equipment 8,500
    Cash flows from financing activities
    Redemption of Bonds 6,000
    Common stock 4,000
    Payment for dividends (20,000)
    Net cash used by financing activities 21,000
    Net increase in cash 15,000
    Cash at beginning of period 20,000
    Cash at end of period $35,000

    B 1. Compute the current cash debt coverage ratio

    38,000 / (24,000 + 15,000) / 2 = 1.95 times

    B2. Compute the cash debt coverage ratio.

    38,000 / 31,000 + 23,000) / 2 = 1.41 times

    B3. Compute the free cash flow.

    38,000 – 20,000 = 18,000

    I do not know if I have the these figures right.

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