Reference no: EM131933408
Assignment -
Read the scenario presented in Broaden Your Perspective (BYP) 12-6 on p. 641 in Ch. 12 of Financial Accounting.
Prepare the statement of cash flows using the indirect method. The only noncash items are depreciation and the gain on sale from investments.
Write a memo to shareholders explaining whether the organization had a performing or underperforming first year.
Discuss the reasons for your conclusion, referencing actual numbers from the statement of cash flows you developed.
Ron Nord and Lisa Smith are examining the following statement of cash flows for Carpino Company for the year ended January 31, 2007.
|
CARPINO COMPANY Statement of Cash Flows For the Year Ended January 31, 2007
|
|
Sources of cash
|
|
|
From sales of merchandise
|
$380,000
|
|
From sale of capital stock
|
420,000
|
|
From sale of investment (purchased below)
|
80,000
|
|
From depreciation
|
55,000
|
|
From issuance of note for truck
|
20,000
|
|
From interest on investments
|
6,000
|
|
Total sources of cash
|
961,000
|
|
Uses of cash
|
|
|
For purchase of fixtures and equipment
|
330,000
|
|
For merchandise purchased for resale
|
258,000
|
|
For operating expenses (including depreciation)
|
160,000
|
|
For purchase of investment
|
75,000
|
|
For purchase of truck by issuance of note
|
20,000
|
|
For purchase of treasury stock
|
10,000
|
|
For interest on note payable
|
3,000
|
|
Total uses of cash
|
856,000
|
|
Net increase in cash
|
$ 105,000
|
Ron claims that Carpino's statement of cash flows is an excellent portrayal of a superb first year with cash increasing $105,000. Lisa replies that it was not a superb first year. Rather, she says, the year was an operating failure, that the statement is presented incorrectly, and that $105,000 is not the actual increase in cash. The cash balance at the beginning of the year was $140,000.
Instructions - With the class divided into groups, answer the following.
1. Using the data provided, prepare a statement of cash flows in proper form using the indirect method. The only noncash items in the income statement are depreciation and the gain from the sale of the investment.
2. With whom do you agree, Ron or Lisa? Explain your position.
|
Textbook demand for the third quarter
: Using the model described above, what is the forecast for the textbook demand for the third quarter of year 8?
|
|
What would be the assessed value of the house in new year
: The owner of a house on Hall Street in Downers Grove, Illinois, received a $3,095.41 tax bill. What would be the assessed value of the house in the New Year?
|
|
What is meant by procedural programming
: What is meant by procedural programming? What are the advantages of object-oriented programming?
|
|
What are some labor-related factors that would favor canada
: What are some labor-related factors that threads should consider when comparing Mexico and Canada?
|
|
Prepare a statement of cash flows in proper form
: Using the data provided, prepare a statement of cash flows in proper form using the indirect method. With whom do you agree, Ron or Lisa? Explain your position
|
|
Organisation on both the short term and long term
: How would any manipulation in cash flow statement affect the organisation on both the short term and long term?
|
|
How many shares would you own immediately after the split
: If you owned 600 shares of stock and the company announced a 3 for 2 stock split, how many shares would you own immediately after the split?
|
|
Creatively resourceful and ethical and examples
: Employers prefer to hire creative, resourceful people. At times, in order to accomplish their goals, some employees may perform actions that some
|
|
What is the height of the density function fx
: What is the height of the density function f(x)? (Round your answer to 4 decimal places.)
|