D and E   Statement of Cash Flows (Direct Method) The Wolff Company's income statement and comparative balance sheets at December 31 of 2013 and 2012 are shown below: WOLFF COMPANY Income Statement

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Chapter1: Financial Statements And Business Decisions
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D and E

 

Statement of Cash Flows (Direct Method)
The Wolff Company's income statement and comparative balance sheets at December 31 of 2013 and 2012 are shown below:

WOLFF COMPANY
Income Statement
For the Year Ended December 31, 2013
Sales Revenue   $698,500
Cost of Goods Sold $473,000  
Wages Expense 94,600  
Insurance Expense 8,800  
Depreciation Expense 18,700  
Interest Expense 9,900  
Income Tax Expense 31,900 636,900
Net Income   $61,600

 

WOLFF COMPANY
Balance Sheets
  Dec. 31, 2013 Dec. 31, 2012
Assets    
Cash $12,100 $5,500
Accounts Receivable 45,100 35,200
Inventory 99,000 66,000
Prepaid Insurance 5,500 7,700
Plant Assets 275,000 214,500
Accumulated Depreciation (74,800) (56,100)
Total Assets $361,900 $272,800
Liabilities and Stockholders' Equity    
Accounts Payable $7,700 $11,000
Wages Payable 9,900 6,600
Income Tax Payable 7,700 8,800
Bonds Payable 143,000 82,500
Common Stock 99,000 99,000
Retained Earnings 94,600 64,900
Total Liabilities and Stockholders' Equity $361,900 $272,800


Cash dividends of $31,900 were declared and paid during 2013. Plant assets were purchased for cash and bonds payable were issued for cash. Bond interest is paid semi-annually on June 30 and December 31. Accounts payable relate to merchandise purchases.

Required
a. Calculate the change in cash that occurred during 2013.
b. Prepare a statement of cash flows using the direct method.
c. Compute free cash flow.
d. Compute the operating-cash-flow-to-current-liabilities ratio. 
e. Compute the operating-cash-flow-to-capital-expenditures ratio. 


a. Change in Cash during 2013 $Answer

 

 Answer

 

b. Use a negative sign with cash outflow answers.

WOLFF COMPANY
Statement of Cash Flows
For Year Ended December 31, 2013
Cash Flow from Operating Activities
Cash Received from Customers   Answer
 
Cash paid for Merchandise Purchased Answer
 
 
Cash Paid to Employees Answer
 
 
Cash Paid as Insurance Answer
 
 
Cash Paid for Interest Answer
 
 
Cash Paid as Income Taxes Answer
 
Answer
 
Cash Provided by Operating Activities   Answer
 
Cash Flow from Investing Activities
Purchase of Plant Assets   Answer
 
Cash Flow from Financing Activities
Issuance of Bonds Payable Answer
 
 
Payment of Dividends Answer
 
 
Cash Provided by Financing Activities   Answer
 
Net Change in Cash   Answer
 
Cash at Beginning of Year   Answer
 
Cash at End of Year   Answer
 


c. Free cash flow $Answer

 



d. Operating-cash-flow-to-current-liabilities ratio.
Round answer to two decimal places.
Answer

 



e. Operating-cash-flow-to-capital-expenditures ratio.
Round answer to two decimal places.
Answer

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