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

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

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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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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