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 $635.000 Cost of Goods Sold Wages Expense Insurance Expense Depreciation Expense $430,000 86.000 3.000 17,000 interest Experse 9.000 Income Tax Expense 29.000 579.000 Net income $56.000 WOLFF COMPANY Balance Sheets Dec. 31, 2013 Dec. 31, 2012 Assets Cash $1,000 S5.000 Accounts Receivable 41,000 32.000 Inventory 90.000 60.000 Prepaid Insurance 5.000 7.000 Plant Assets 250.000 195.000 Accumulated Depreciation (68.000) (51.000) %24329.000 $248.000 Total Assets Liabilities and Stockholders Equity Accounts Payable 57.000 S10.000 Wages Payable Income Tax Payable 9.000 6.000 7.000 8,000 Bonds Payable Common Stock Retained Earming 130.000 75,000 90,000 90.000 36.000 59,000 Total Liabilities and Stockhoiders Equity $329.000 $248.000 Cash dividends of $29,000 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 purc Required a. Calculate the change in cash that occurred during 2013. b. Prepare a statement of cash flows using the direct method. Compute free cash flow
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 $635.000 Cost of Goods Sold Wages Expense Insurance Expense Depreciation Expense $430,000 86.000 3.000 17,000 interest Experse 9.000 Income Tax Expense 29.000 579.000 Net income $56.000 WOLFF COMPANY Balance Sheets Dec. 31, 2013 Dec. 31, 2012 Assets Cash $1,000 S5.000 Accounts Receivable 41,000 32.000 Inventory 90.000 60.000 Prepaid Insurance 5.000 7.000 Plant Assets 250.000 195.000 Accumulated Depreciation (68.000) (51.000) %24329.000 $248.000 Total Assets Liabilities and Stockholders Equity Accounts Payable 57.000 S10.000 Wages Payable Income Tax Payable 9.000 6.000 7.000 8,000 Bonds Payable Common Stock Retained Earming 130.000 75,000 90,000 90.000 36.000 59,000 Total Liabilities and Stockhoiders Equity $329.000 $248.000 Cash dividends of $29,000 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 purc Required a. Calculate the change in cash that occurred during 2013. b. Prepare a statement of cash flows using the direct method. Compute free cash flow
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text: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
$635,000
Cost of Goods Sold
$430,000
Wages Expense
86,000
Insurance Expense
8,000
Depreciation Expense
17,000
Interest Expense
9,000
Income Tax Expense
29,000 579,000
Net Income
$56,000
WOLFF COMPANY
Balance Sheets
Dec. 31, 2013 Dec. 31, 2012
Assets
Cash
$11,000
$5,000
Accounts Receivable
41,000
32,000
Inventory
90,000
60,000
Prepaid Insurance
5,000
7,000
Plant Assets
250,000
195,000
Accumulated Depreciation
(68,000)
(51,000)
Total Assets
$329.000
$248,000
Liabilities and Stockholders' Equity
Accounts Payable
$7,000
$10,000
9,000
6,000
Wages Payable
Income Tax Payable
7,000
8,000
Bonds Payable
130,000
75,000
Common Stock
90,000
90,000
Retained Earnings
86,000
59,000
Total Liabilities and Stockholders' Equity
$329,000
$248,000
Cash dividends of $29,000 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.
1112 P
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