Financial Accounting: Tools for Business Decision Making, 8th Edition
Financial Accounting: Tools for Business Decision Making, 8th Edition
8th Edition
ISBN: 9781118953808
Author: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
Publisher: WILEY
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Chapter 12, Problem 12.14BE
To determine

Cash flows from operating activities: These refer to the cash received or cash paid in day-to-day operating activities of a company.

Direct method: This method uses the basis of cash for preparing the cash flows of statement.

Cash flows from operating activities: In this direct method, cash flow from operating activities is computed by using all cash receipts and cash payments during the year.

  1. A. Cash Receipts: It encompasses all the cash receipts from sale of goods and on account receivable.
  2. B. Cash Payments: It encompasses all the cash payments that are made to suppliers of goods and all expenses that are paid.

To Compute: Cash payments for income taxes under direct method.

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For the FY 2018, Frederick Company had net sales of $1,100,000 and a net income of $55,000, paid income taxes of $30,000, and had a before-tax interest expense of $17,500. Use this information to determine the Times Interest Earned Ratio.
Use the following information for Taco Swell, Inc., (assume the tax rate is 24 percent):      2017 2018     Sales $ 15,573   $ 15,336     Depreciation   1,741     1,816     Cost of goods sold   4,379     4,787     Other expenses   986     864     Interest   835     966     Cash   6,187     6,706     Accounts receivable   8,120     9,667     Short-term notes payable   1,250     1,227     Long-term debt   20,560     24,836     Net fixed assets   51,064     54,513     Accounts payable   4,512     4,884     Inventory   14,419     15,368     Dividends   1,350     1,698        Prepare a balance sheet for this company for 2017 and 2018. (Do not round intermediate calculations.)       Prepare an income statement for this company for 2017 and 2018. (Do not round intermediate calculations. Round your answers to 2 decimal places, e.g., 32.16. Input all answers as positive values.)
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Financial Accounting: Tools for Business Decision Making, 8th Edition

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