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Prepare a statement of cash flow using the indirect method
Course:- Accounting Basics
Reference No.:- EM131722908




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Problem - This is a comprehensive problem all contained on this spreadsheet tab. You are to prepare a cash flow statement, a vertical analysis, a horizontal analysis, and some ratio calculations. Scroll down the spreadsheet to complete each part.

Philadelphia Widget Corporation is in the process of preparing financial statements for the year ended 12/31/2015.

They have completed the balance sheet and income statement as shown.

Philadelphia Widget CorporationIncome StatementFor the year ended 12/31/2015




Revenue


1,235,000

Cost of Goods Sold


806,356

Gross Profit


428,644




Administrative Expenses:



  Salaries

212,450


  Rent

82,500


  Depreciation

24,800


  Total Administrative Expense


319,750

Operating Profit


108,894




Gain on Sale of Equipment


4,500

Interest Expense


(42,115)

Net Income


71,279

 

Philadelphia Widget Corporation Balance Sheet

As of 12/31/2015, 12/31/2014, and 12/31/2013


2015

2014

2013

Cash


119,411


89,564


105,644

Accounts Receivable


85,455


83,118


78,400

Inventory


41,600


48,560


62,600

Prepaid Expenses


14,500


18,100


24,000

Total Current Assets


260,966


239,342


270,644








Land


50,000


50,000


50,000

Buildings and Equipment

182,450


172,450


166,800


Accumulated Depreciation

78,900

103,550

62,600

109,850

54,580

112,220








Total Assets


414,516


399,192


432,864















Accounts Payable


62,525


51,480


45,200

Wages payable


4,500


4,500


1,500

Unearned Revenue


3,000


-


-

Current Portion of Long-Term Debt


50,000


50,000


50,000

Total Current Liabilities


120,025


105,980


96,700








Long-Term Debt


175,000


225,000


275,000








Common Stock, 3500 shares outstanding

35,000


35,000


35,000


Retained Earnings

84,491


33,212


26,164


Total Stockholders' Equity


119,491


68,212


61,164








Total Liabilities and Equity


414,516


399,192


432,864

A. Prepare a Statement of Cash Flow using the indirect method for the 2015, using the above statements and the following additional information:

1. Equipment costing $30,000 was purchased in 2015.

2. Equipment having an original cost of $20,000 and accumulated depreciation of $8,500 was sold for $16,000 during 2015.

3. A dividend of $20,000 was declared and paid in 2015.

B. Prepare a vertical analysis (1 year) of the income statement above and a horizontal analysis (2 years) of the balance sheet.

C. Calculate the following ratios based on 12/31/2015 numbers:

1. Earnings per share

2. Return on common stockholder's equity

3. Return on assets

4. Current ratio

5. Acid-test ratio

6. Accounts receivable turnover




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