E5-18B (Preparation of a Statement of Cash Flows Analysis) A comparative balance sheet for Harrison Corporation is presented below.
mujionostevoE5-18B (Preparation of a Statement of Cash Flows Analysis) A comparative balance sheet for Harrison Corporation is presented below.
HARRISON CORPORATION
BALANCE SHEETS
December 31
Assets 2014 2013 Inc/Dec.
Cash $ 36,500 $ 11,000 $ 25,500 Inc.
Accounts receivable 41,000 33,000 8,000 Inc.
Inventory 90,000 94,500 4,500 Dec.
Building 130,000 100,000 30,000 Inc.
Accumulated deprec building (34,500) (21,000) 13,500 Inc.
Land 35,500 55,000 19,500 Dec.
Total $ 298,500 $ 272,500
Liabilities and Stockholders’ Equity
Accounts payable $ 17,000 $ 23,500 6,500 Dec.
Bonds payable 75,000 100,000 25,000 Dec.
Common stock ($1 par) 107,000 82,000 25,000 Inc.
Retained earnings 99,500 67,000 32,500 Inc.
Total $ 298,500 $272,500
Additional information:
Cash dividends of $30,000 were declared and paid.
Bonds payable of $25,000 were converted to common stock.
Instructions
(a) Prepare a statement of cash flows for 2014.
(b) Compute the current ratio (current assets current liabilities) as of December 31, 2013 and 2014 and compute free cash flow for the year 2014.
(c) In light of the analysis in (b), comment on Harrison’s liquidity and financial flexibility.
- 10 years ago
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