Instructions a. Prepare a statement of cash flows for 2025. b. Prepare an unclassified balance sheet as it would appear at December 31, 2025. c. How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios. P4.7 (LO 1, 2) Groupwork (Preparation of a Statement of Cash Flows and Balance Sheet) Aero Inc. had the following balance sheet at December 31, 2024. Aero Inc. Balance Sheet December 31, 2024 Cash $ 20,000 I Accounts payable $ 30,000 Accounts receivable Investments 21,200 Bonds payable 41,000 32,000 Common stock 100,000 Plant assets (net) Land 81,000 Retained earnings 23,200 40,000 $194,200 $194,200 During 2025, the following occurred. 1. Aero liquidated its available-for-sale debt investment portfolio at a loss of $5,000. 2. A tract of land was purchased for $38,000. 3. An additional $30,000 in common stock was issued at par. 4. Dividends totaling $10,000 were declared and paid to stockholders. 5. Net income for 2025 was $35,000, including $12,000 in depreciation expense. 6. Land was purchased through the issuance of $30,000 in additional bonds. 7. At December 31, 2025, Cash was $70,200, Accounts Receivable was $42,000, and Accounts Payable was $40,000. Instructions a. Prepare a statement of cash flows for the year 2025 for Aero. b. Prepare the unclassified balance sheet as it would appear at December 31, 2025. c. Compute Aero's free cash flow and current cash debt coverage for 2025. d. Use the analysis of Aero to illustrate how information in the balance sheet and statement of cash flows helps the user of the financial statements.
Instructions a. Prepare a statement of cash flows for 2025. b. Prepare an unclassified balance sheet as it would appear at December 31, 2025. c. How might the statement of cash flows help the user of the financial statements? Compute two cash flow ratios. P4.7 (LO 1, 2) Groupwork (Preparation of a Statement of Cash Flows and Balance Sheet) Aero Inc. had the following balance sheet at December 31, 2024. Aero Inc. Balance Sheet December 31, 2024 Cash $ 20,000 I Accounts payable $ 30,000 Accounts receivable Investments 21,200 Bonds payable 41,000 32,000 Common stock 100,000 Plant assets (net) Land 81,000 Retained earnings 23,200 40,000 $194,200 $194,200 During 2025, the following occurred. 1. Aero liquidated its available-for-sale debt investment portfolio at a loss of $5,000. 2. A tract of land was purchased for $38,000. 3. An additional $30,000 in common stock was issued at par. 4. Dividends totaling $10,000 were declared and paid to stockholders. 5. Net income for 2025 was $35,000, including $12,000 in depreciation expense. 6. Land was purchased through the issuance of $30,000 in additional bonds. 7. At December 31, 2025, Cash was $70,200, Accounts Receivable was $42,000, and Accounts Payable was $40,000. Instructions a. Prepare a statement of cash flows for the year 2025 for Aero. b. Prepare the unclassified balance sheet as it would appear at December 31, 2025. c. Compute Aero's free cash flow and current cash debt coverage for 2025. d. Use the analysis of Aero to illustrate how information in the balance sheet and statement of cash flows helps the user of the financial statements.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Instructions
a. Prepare a statement of cash flows for 2025.
b. Prepare an unclassified balance sheet as it would appear at December 31, 2025.
c. How might the statement of cash flows help the user of the financial statements? Compute two cash
flow ratios.
P4.7 (LO 1, 2) Groupwork (Preparation of a Statement of Cash Flows and Balance Sheet)
Aero Inc. had the following balance sheet at December 31, 2024.
Aero Inc.
Balance Sheet
December 31, 2024
Cash
$ 20,000
I
Accounts payable
$ 30,000
Accounts receivable
Investments
21,200
Bonds payable
41,000
32,000
Common stock
100,000
Plant assets (net)
Land
81,000
Retained earnings
23,200
40,000
$194,200
$194,200
During 2025, the following occurred.
1. Aero liquidated its available-for-sale debt investment portfolio at a loss of $5,000.
2. A tract of land was purchased for $38,000.
3. An additional $30,000 in common stock was issued at par.
4. Dividends totaling $10,000 were declared and paid to stockholders.
5. Net income for 2025 was $35,000, including $12,000 in depreciation expense.
6. Land was purchased through the issuance of $30,000 in additional bonds.
7. At December 31, 2025, Cash was $70,200, Accounts Receivable was $42,000, and Accounts Payable
was $40,000.
Instructions
a. Prepare a statement of cash flows for the year 2025 for Aero.
b. Prepare the unclassified balance sheet as it would appear at December 31, 2025.
c. Compute Aero's free cash flow and current cash debt coverage for 2025.
d. Use the analysis of Aero to illustrate how information in the balance sheet and statement of cash
flows helps the user of the financial statements.
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