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A) Explain how Unilever Pakistan, Inc. achieved positive cash flows from operating activities despite incurring a net loss for the year. (B) Does the company's financial position appear to be improving or deteriorating? Explain.

A) Explain how Unilever Pakistan, Inc. achieved positive cash flows from operating activities despite incurring a net loss for the year. (B) Does the company's financial position appear to be improving or deteriorating? Explain.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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(A) Explain how Unilever Pakistan, Inc. achieved positive cash flows from operating activities despite incurring a net loss for the year. (B) Does the company's financial position appear to be improving or deteriorating? Explain.
UNILEVER PAKISTAN, INC. Comparative Income Statement For the Years Ended December 31, 2019 and 2020 2019 2020 Sales Less: Cost of Goods Sold Gross Profit on Sales $350,000 140,000 $210,000 243,000 $500,000 200,000 $300,000 260,000 Less: Operating Expenses 1,000 $(34,000) Less: Loss on Sale of Marketable Securities Net Income (Loss) $40,000 UNILEVER PAKISTAN, INC. Comparative Balance Sheets December 31, 2019 2020 Assets $10,000 20,000 40,000 120,000 Cash and Cash Equivalents Marketable Securities $60,000 5,000 Accounts Receivable Inventory Plant and Equipment (Net of Accumulated Depreciation) 23,000 122,000 285,000 300,000 Totals $490,000 $495,000 Liabilities & Stockholders' Equity $50,000 17,000 Accounts Payable Accrued Expenses Payable Note Payable Capital Stock (No Par Value) Retained Earnings $73,000 14,000 253,000 13,500 20,000 $373,500 245,000 120,000 58,000 $490,000 Totals 2 Additional Information for 2020: Cash Dividend Declared and Paid $4,000 14,000 15,000 1,000 20,000 2,000 18,000 10,000 Marketable Securities Sold for Cash Cost of Marketable Securities Sold Non-operating Loss as Result of Sale of Securities Cost of Plant Assets Purchased Cash Paid for Plant Assets Note Payable Issued for Balance Due on Plant Assets Paid Off a Previous Note Payable Cash Invested into Business by Owners 15,000
Transcribed Image Text:UNILEVER PAKISTAN, INC. Comparative Income Statement For the Years Ended December 31, 2019 and 2020 2019 2020 Sales Less: Cost of Goods Sold Gross Profit on Sales $350,000 140,000 $210,000 243,000 $500,000 200,000 $300,000 260,000 Less: Operating Expenses 1,000 $(34,000) Less: Loss on Sale of Marketable Securities Net Income (Loss) $40,000 UNILEVER PAKISTAN, INC. Comparative Balance Sheets December 31, 2019 2020 Assets $10,000 20,000 40,000 120,000 Cash and Cash Equivalents Marketable Securities $60,000 5,000 Accounts Receivable Inventory Plant and Equipment (Net of Accumulated Depreciation) 23,000 122,000 285,000 300,000 Totals $490,000 $495,000 Liabilities & Stockholders' Equity $50,000 17,000 Accounts Payable Accrued Expenses Payable Note Payable Capital Stock (No Par Value) Retained Earnings $73,000 14,000 253,000 13,500 20,000 $373,500 245,000 120,000 58,000 $490,000 Totals 2 Additional Information for 2020: Cash Dividend Declared and Paid $4,000 14,000 15,000 1,000 20,000 2,000 18,000 10,000 Marketable Securities Sold for Cash Cost of Marketable Securities Sold Non-operating Loss as Result of Sale of Securities Cost of Plant Assets Purchased Cash Paid for Plant Assets Note Payable Issued for Balance Due on Plant Assets Paid Off a Previous Note Payable Cash Invested into Business by Owners 15,000
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