5) Compute the current ratio (current assets + current liabilities) as of January 1, 2020, and December 31, 2020. (Round ratios to 1 decimal place, e.g. 4.5.) Current ratio December 31, 2020 January 1, 2020 Compute free cash flow for the year 2020. (Show amounts that decrease cash flow with either a-sign e.g. -15,000 or in parenthesis e.g. (15,000).) Free Cash Flow $
5) Compute the current ratio (current assets + current liabilities) as of January 1, 2020, and December 31, 2020. (Round ratios to 1 decimal place, e.g. 4.5.) Current ratio December 31, 2020 January 1, 2020 Compute free cash flow for the year 2020. (Show amounts that decrease cash flow with either a-sign e.g. -15,000 or in parenthesis e.g. (15,000).) Free Cash Flow $
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter12: Fainancial Statement Analysis
Section: Chapter Questions
Problem 54CE
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Question
![The comparative balance sheets of Buffalo Corporation at the beginning and end of the year 2020 appear below.
Assets
Cash
Accounts receivable
Equipment
BUFFALO CORPORATION
BALANCE SHEETS
Dec. 31, 2020
Less: Accumulated Depreciation-Equipment
Total
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total
$21,140
107,140
40,140
(17,000)
$151,420
$21,140
101,140
29,140
$151,420
Jan. 1, 2020
$14,610
89,610
23,610
(11,000 )
$116,830
$16,610
81,610
18,610
$116,830
Inc./Dec.
$6,530 Inc.
17,530 Inc.
16,530 Inc.
6,000 Inc.
4,530 Inc.
19,530 Inc.
10,530 Inc.
Net income of $45,140 was reported, and dividends of $34,610 were paid in 2020. New equipment was purchased and none was sold.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3cf07100-3ed4-4a5d-bf17-b882f0d16b9e%2F1e03a58e-033f-4642-a7af-bc8602bff23c%2F9o4y8a4_processed.png&w=3840&q=75)
Transcribed Image Text:The comparative balance sheets of Buffalo Corporation at the beginning and end of the year 2020 appear below.
Assets
Cash
Accounts receivable
Equipment
BUFFALO CORPORATION
BALANCE SHEETS
Dec. 31, 2020
Less: Accumulated Depreciation-Equipment
Total
Liabilities and Stockholders' Equity
Accounts payable
Common stock
Retained earnings
Total
$21,140
107,140
40,140
(17,000)
$151,420
$21,140
101,140
29,140
$151,420
Jan. 1, 2020
$14,610
89,610
23,610
(11,000 )
$116,830
$16,610
81,610
18,610
$116,830
Inc./Dec.
$6,530 Inc.
17,530 Inc.
16,530 Inc.
6,000 Inc.
4,530 Inc.
19,530 Inc.
10,530 Inc.
Net income of $45,140 was reported, and dividends of $34,610 were paid in 2020. New equipment was purchased and none was sold.
![5)
Prepare a statement of cash flows for the year 2020. (Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in
parenthesis e.g. (15,000).)
Cash Flows from Operating Activities
Net Income
Adjustment to reconcile net income to
Net Cash Provided by Operating Activities v
Depreciation Expense
Increase in Accounts Receivable v
Increase in Accounts Payable ✓
Net Cash Provided by Operating Activities ✓
Cash Flows from Investing Activities
Purchase of Equipment
BUFFALO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2020
Cash Flows from Financing Activities
Issuance of Common Stock
Payment of Dividends
Net Increase in Cash
Net Cash Used by Financing Activities
Cash at Beginning of Year
Cash at End of Year
Current ratio
v
December 31, 2020
Free Cash Flow $
V
✓
✓
$
6,000
(17,530)
4,530
January 1, 2020
19,530
(34,610)
$
45,140
(7,000)
38,140
(16,530)
(15,080)
Compute the current ratio (current assets + current liabilities) as of January 1, 2020, and December 31, 2020. (Round ratios to 1
decimal place, e.g.4.5.)
6,530
14,610
21,140
Compute free cash flow for the year 2020. (Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in parenthesis e.g.
(15,000).)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3cf07100-3ed4-4a5d-bf17-b882f0d16b9e%2F1e03a58e-033f-4642-a7af-bc8602bff23c%2Ffd18sm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:5)
Prepare a statement of cash flows for the year 2020. (Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in
parenthesis e.g. (15,000).)
Cash Flows from Operating Activities
Net Income
Adjustment to reconcile net income to
Net Cash Provided by Operating Activities v
Depreciation Expense
Increase in Accounts Receivable v
Increase in Accounts Payable ✓
Net Cash Provided by Operating Activities ✓
Cash Flows from Investing Activities
Purchase of Equipment
BUFFALO CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2020
Cash Flows from Financing Activities
Issuance of Common Stock
Payment of Dividends
Net Increase in Cash
Net Cash Used by Financing Activities
Cash at Beginning of Year
Cash at End of Year
Current ratio
v
December 31, 2020
Free Cash Flow $
V
✓
✓
$
6,000
(17,530)
4,530
January 1, 2020
19,530
(34,610)
$
45,140
(7,000)
38,140
(16,530)
(15,080)
Compute the current ratio (current assets + current liabilities) as of January 1, 2020, and December 31, 2020. (Round ratios to 1
decimal place, e.g.4.5.)
6,530
14,610
21,140
Compute free cash flow for the year 2020. (Show amounts that decrease cash flow with either a-sign e.g.-15,000 or in parenthesis e.g.
(15,000).)
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