3A-PROBLEM 7(C), 8(C) - 1700T_web 6:28 PM Prepare a...

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Unformatted text preview: 1700T_web 1/16/06 6:28 PM Page 50 50 Prepare a statement Ufa/15h flawsiindirect method, and compute cash-based ratios. (50 A, 5) (a) Cash from operations $91 ,000 Prepare a statement Ufa/15h flawsidirect method, and compute cash-based ratios. (50 5, 6) (a) Cash from operations $91,000 CHAPTER 12 Statement of Cash Flows REVISED PAGES P12-7C Presented below are the financial statements of Shafi Company. SHAFI COMPANY Comparative Balance Sheets December 31 Assets 2007 Cash $ 37,000 Accounts receivable 55,000 Merchandise inventory 34,000 Property, plant, and equipment 162,000 Accumulated depreciation (36,000) Total $252,000 Liabilities and Stockholders’ Equity Accounts payable $ 20,000 Income taxes payable 19,000 Bonds payable 60,000 Common stock 42,000 Retained earnings 1 11,000 Total $252,000 SHAFI COMPANY Income Statement For the Year Ended December 31, 2007 Sales Cost of goods sold Gross profit Selling expenses 2006 :1; 26,000 43,000 38,000 112,000 (32000) $187,000 $ 27,000 15,000 50,000 30,000 65,000 $187,000 $448,000 272,000 $45,000 Administrative expenses 9,000 Income from operations Interest expense Income before income taxes Income tax expense Net income Additional data: 1. Dividends declared and paid were $40,000. 176,000 54,000 122,000 4,000 118,000 32,000 $ 86,000 2. During the year equipment was sold for $3,000 cash. This equipment cost $15,000 originally and had a book value of $3,000 at the time of sale. 3. Equipment costing $65,000 was purchased for cash during the year. 4. All depreciation expense is in the selling expense category. 5. All sales and purchases are on account. Instructions (a) Prepare a statement of cash flows using the indirect method. (b) Compute these cash—basis measures: (1) Current cash debt coverage ratio. (2) Cash debt coverage ratio. (3) Free cash flow. *P12-8C Data for Shafi Company are presented in P12—7C. Further analysis reveals the followin g. 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash. Instructions (a) Prepare a statement of cash flows for Shafi Company using the direct method. sfk TEtlIBOOIGIGI'S ...
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