Assuming Sherban reports dividends paid as a financing activity:Calculate net cash flow from operating activities. Use a proper three-line title.Calculate Sherban’s current cash debt coverage ratio, cash debt coverage ratio and free cash flow.Using your answers in part (b) and comment on Sherban’s liquidity and financial flexibility.Under IFRS, how else might Sherban account for cash dividends paid in the cash flow statement? The balance sheet for Sherban Company at year-end is below:Sberban CompanyBalance SheetDecember 31, 2019CashAccounts receivableBuildings and equipmentAccumulated depreciation-buildings and equipmentTotal AssetsAssets1.2.4.$ 44,00039,000178,000(46,000)$215,000Liabilities & Shareholders' EquityAccounts payableBonds payableAdditional information:The December 31, 2019 balance in accounts receivable represents an increase of$19,000 over last year's balance.Net income for 2019 is $60,000.3. Depreciation expense for 2019 is $15,000.In 2019, the company made cash purchases for land, $27,000 and equipment,$52,000. The opening balances of selected accounts at January 1, 2019 wereas follows:$ 28,00054,00069,000Common sharesRetained earnings64,000Total Liabilities and Equity $215.000Retained Earnings, Jan 1, 2019$29,000.Accounts Payable, Jan 1, 2019$21,000Bonds Payable, Jan 1, 2019$15,000Assume bonds are non-current liabilities and cash dividends were paid.

Answered: The balance sheet for Sherban Company…

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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Assuming Sherban reports dividends paid as a financing activity:

Calculate net cash flow from operating activities. Use a proper three-line title.
Calculate Sherban’s current cash debt coverage ratio, cash debt coverage ratio and free cash flow.
Using your answers in part (b) and comment on Sherban’s liquidity and financial flexibility.
Under IFRS, how else might Sherban account for cash dividends paid in the cash flow statement?

The balance sheet for Sherban Company at year-end is below:
Sberban Company
Balance Sheet
December 31, 2019
Cash
Accounts receivable
Buildings and equipment
Accumulated depreciation-
buildings and equipment
Total Assets
Assets
1.
2.
4.
$ 44,000
39,000
178,000
(46,000)
$215,000
Liabilities & Shareholders' Equity
Accounts payable
Bonds payable
Additional information:
The December 31, 2019 balance in accounts receivable represents an increase of
$19,000 over last year's balance.
Net income for 2019 is $60,000.
3. Depreciation expense for 2019 is $15,000.
In 2019, the company made cash purchases for land, $27,000 and equipment,
$52,000. The opening balances of selected accounts at January 1, 2019 were
as follows:
$ 28,000
54,000
69,000
Common shares
Retained earnings
64,000
Total Liabilities and Equity $215.000
Retained Earnings, Jan 1, 2019
$29,000.
Accounts Payable, Jan 1, 2019
$21,000
Bonds Payable, Jan 1, 2019
$15,000
Assume bonds are non-current liabilities and cash dividends were paid.

Expert Solution

Explanation -

Statement of cash flow -

This statement shows the inflow and outflow of cash during the financial year. This movement in the statement is happen due to three major activities

Operating, Investing and Financing Activities.

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