Answered: Tangent Controls Ltd. is a manufacturer…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

100%

Tangent Controls Ltd. is a manufacturer of crash-protected event recorders that are used in railway systems around the world to record event data. These data can be retrieved and analyzed to monitor and improve operations, but also to provide diagnostic data in the event of rail crashes. The small Ottawa-based company has customers across the world, but its largest market is North America. The company has been hurt by the U.S. economy, seeing a 12% decline in sales over the prior year. The company is hoping that the latest industry developments, which call for a significant increase in the shipment of oil by railcar, will mean an increase in sales. In the meantime, the company has been seeking new investors and has approached a leading Canadian venture capital firm to see if it might be interested in investing. As part of its approach, Tangent has provided the following financial information for the most recent fiscal year. TANGENT CONTROLS LTD. Statement of Financial Position As at September 30 2024 2023 Assets Current assets: Cash $ 0 $ 72,000 Accounts receivable (net) 601,000 378,000 Inventory 760,000 594,000 Total current assets 1,361,000 1,044,000 Equipment 1,608,000 1,908,000 Accumulated depreciation, equipment (1,425,000) (1,440,000) Total assets $ 1,544,000 $ 1,512,000 Liabilities and shareholders’ equity Current liabilities: Bank indebtedness $ 22,000 $ 0 Accounts payable 260,000 252,000 Total current liabilities 282,000 252,000 Bank loan payable 152,000 144,000 Common shares 900,000 900,000 Retained earnings 210,000 216,000 Total liabilities and shareholders’ equity $ 1,544,000 $ 1,512,000 TANGENT CONTROLS LTD. Statement of Income For the year ended September 30, 2024 Sales revenue $6,070,000 Cost of goods sold 3,875,000 Gross profit 2,195,000 Wages expense 1,580,000 Utilities expense 290,000 Depreciation expense 225,000 Rent expense 79,000 Interest expense 47,000 Loss from operations (26,000) Gain on sale of equipment 40,000 Earnings before income tax 14,000 Income tax expense 3,000 Net income $ 11,000 Additional information: During the year, the company repaid principal of $30,000 on its loan payable. During the year, equipment with a net carrying amount of $60,000 was sold. No equipment was purchased during the year. Required You work for the venture capital firm and have been tasked with preparing the statement of cash flows for Tangent using either the direct or indirect method for determining cash flows from operating activities. Prepare the statement. Discuss significant observations from the statement of cash flows that your firm would want to consider. AP5-13A (Determining cash collected from customers and paid to suppliers) Southbend Company had sales of $734,000 for the year. The company reported accounts receivable of $54,000 at the end of last year and $60,000 at the end of this year. Southbend’s cost of goods sold this year was $440,000. In last year’s statement of financial position, the company reported inventory of $62,000 and accounts payable of $32,000. In this year’s statement of financial position, Southbend reported inventory of $66,000 and accounts payable of $38,000. Required Calculate the amount of cash that Southbend collected from its customers during the year. Calculate the amount of cash that Southbend paid to its suppliers for inventory during the year.

Q
ÏÏÏ
=
R
I
...
TANGENT CONTROLS LTD.
Statement of Income
For the year ended September 30, 2024
Sales revenue
Cost of goods sold
Gross profit
Wages expense
Utilities expense
Depreciation expense
Rent expense
Interest expense
Loss from operations
Gain on sale of equipment
Earnings before income tax
Income tax expense
Net income
$6,070,000
3,875,000
2,195,000
1,580,000
290,000
225,000
79,000
47,000
(26,000)
40,000
14,000
3,000
$ 11,000 ►
Additional information:
1. During the year, the company repaid principal of $30,000 on its loan payable.
2. During the year, equipment with a net carrying amount of $60,000 was sold.
3. No equipment was purchased during the year.
Required
a. You work for the venture capital firm and have been tasked with preparing the statement of
cash flows for Tangent using either the direct or indirect method for determining cash flows
from operating activities. Prepare the statement.
b. Discuss significant observations from the statement of cash flows that your firm would want to
consider.

Q
¡II
=
17
E
AP5-12A (Preparation of statement of cash flows) Tangent Controls Ltd. is a manufacturer
of crash-protected event recorders that are used in railway systems around the world to record
event data. These data can be retrieved and analyzed to monitor and improve operations, but also
to provide diagnostic data in the event of rail crashes. The small Ottawa-based company has
customers across the world, but its largest market is North America. The company has been hurt
by the U.S. economy, seeing a 12% decline in sales over the prior year. The company is hoping that
the latest industry developments, which call for a significant increase in the shipment of oil by
railcar, will mean an increase in sales. In the meantime, the company has been seeking new
investors and has approached a leading Canadian venture capital firm to see if it might be
interested in investing. As part of its approach, Tangent has provided the following financial
information for the most recent fiscal year.
5-48
Assets
Current assets:
Cash
TANGENT CONTROLS LTD.
Statement of Financial Position
As at September 30
Accounts receivable (net)
Inventory
Total current assets
Equipment
Accumulated depreciation, equipment
Total assets
Liabilities and shareholders' equity
Current liabilities:
$
Bank indebtedness
Accounts payable
Total current liabilities
Bank loan payable
2024
0
601,000
760,000
1,361,000
$ 22,000
260,000
282,000
152,000
Common shares
900,000
Retained earnings
210,000
Total liabilities and shareholders' equity $ 1,544,000
$
2023
1,044,000
1,608,000 1,908,000
(1,425,000) (1,440,000)
$ 1,544,000 $1,512,000
$
72,000
378,000
594,000
0
252,000
252,000
144,000
900,000
216,000
$ 1,512,000
<
>

Expert Solution

Step by step

Solved in 4 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions