Accounting Problems

Accounting Problems

Problem 1

Eagle Corporation’s current Income Statement and the last two years of Balance Sheet are listed below for

the year ending December 31. Prepare the full Statement of Cash flows using the direct method. Then

show the operating activities using the indirect method.

Income Statement 2009 Balance Sheets 2009 2008

Sales $345 Cash $ 82 $ 40

Expenses: Accounts Receivable 180 150

Cost of Goods Sold $120 Inventory 170 200

Operating Expenses 58 Equipment 200 140

Depreciation Expense 20 Accum. Depreciation (72) (60)

Interest Expense 2 200 Total Assets $560 $470

Operating Income 145

Gain on Sale–Equip. 5 Accounts Payable $100 $ 80

Income before Taxes 150 L/T Notes Payable 100 50

Tax Expense 30 Common Stock 250 250

Net Income $120 Retained Earnings 110 90

Total Liabilities &

Stockholder Equity $560 $470

Additional Information:

Eagle Corp. sold equipment for $57 which had a cost of $60.

 

Problem 2

During 2010, Delivery Systems Incorporated net cash provided by operating activities of $1,200,000,

capital expenditures of $540,000, dividends of $260,000, and average maturities of long-term debt over

the next five years of $650,000.

  1. A) Compute Delivery Systems Incorporated free cash flow for 2010.
  2. B) Compute Delivery Systems Incorporated cash flow adequacy ratio for 2010.

Problem 3

Selected data from the financial statements of Cabo Corporation for the years ended

December 31, 2009 and 2010, are presented below.

(In thousands) 2010 2009Cash and cash equivalents $ ? $ 4,500

Total current assets (except cash) 180,000 150,000

Income taxes paid 5,000 2,000

Interest paid 5,100 7,200

Net cash provided by operating activities 9,500 6,400

Net cash used by investing activities 5,100 6,300

Net cash provided by financing activities 1,500 7,400

Depreciation and amortization 7,000 5,000

Total stockholders’ equity 115,000 105,000

Net income 4,000 2,000

  1. Refer to Cabo Corp. What is the amount of cash and cash equivalents at the end of

2010?

Problem 4

King Corporation

Selected data and additional information from the records of King Corporation

are presented below.

Balance Sheet Data 2012 2011

Accounts receivable $132,000 $165,000

Inventories 61,600 55,000

Accounts payable 41,800 77,000

Salaries payable 11,000 5,500

Equipment 121,000 77,000

Accumulated depreciation 30,800 35,200

Bonds payable 110,000 220,000

Common stock 330,000 220,000

Retained earnings 83,600 44,000

Income Statement Data 2012

Net sales $1,000,000

Cost of goods sold 700,000

Operating expenses (Excluding depreciation

expense)

185,000

Net income (Includes depreciation expense and

gain)

102,400

Gain on sale of equipment 6,000

Additional information:

  1. Equipment with a cost of $45,000 and a book value of $22,000 was sold

for $28,000 during 2012.

  1. Common stock was issued to retire bonds payable during 2012.3. The only items affecting retained earnings in 2012 were net income and

dividends declared and paid.

  1. a. Refer to the information provided for King Corporation, how would the

transaction to retire bonds by issuing common stock be reported on the

statement of cash flows for 2012 for King Corporation?

  1. b. Refer to the information provided for King Corporation, what amount of cash

was received from customers during 2012?

  1. c. Refer to the information provided for King Corporation, what is the amount

paid to suppliers for purchases of inventory during 2012?

  1. d. Refer to information provided for King Corporation, what is the amount paid

for operating expenses during 2012?

  1. e. Prepare the operating activities section of the statement of cash flows for

King Corporation for 2012 if the direct method is used to determine net cash

flow from operating activities.

  1. f. Prepare the operating activities section of a statement of cash flows for King

Corporation for 2012 if the indirect method is used.

  1. g. Prepare the investing activities section of a statement of cash flows for 2012

for King Corporation.

  1. Prepare the financing activities section of a statement of cash flows for 2012

for King Corporation.

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