Reynolds Inc. for 2011 using the indirect method. Be sure to prepare a schedule for any non-cash items for disclosure, if appropriate.
AnFTutorProblem
1. Use the following information to prepare a statement of cash flows for Reynolds Inc. for 2011 using the indirect method. Be sure to prepare a schedule for any non-cash items for disclosure, if appropriate.
(a) Net income $10,000 (depreciation expense, 5,000; inventory decrease, $1,000; no changes in accounts receivable or accounts payable).
(b) Issued capital stock for $4,000 of equipment.
(c) Sold equipment for $8,000, book value $8,000.
(d) Paid cash dividend, $3,000 (declared in prior year).
(e) Paid long-term debt principal, $8,000 and short-term debt principal, $2,000.
(f) Purchased equipment for $12,000 in exchange for a note payable due in two years.
(g) The cash balance on January 1, 2010 was $10,000.
2. Mucky Corporation was just formed. The following accounts of Mucky
Corporation, with code letters, are needed to record the transactions given below.
You are to indicate the appropriate journal entry for each transaction by entering
the code letters and the correct amounts.
A. | Cash |
| G. | Bonds payable | ||||
B. | Remaining assets |
| H. | Contributed capital in excess of par | ||||
C. | Retained earnings |
| I. | Treasury stock | ||||
D. | Common stock, par $20 |
| J. | Other accounts not listed | ||||
E. | Dividends payable |
| K. | Dividends declared | ||||
F. | Accounts payable |
| L. | No entry needed
| ||||
|
Transaction |
Debits | Credits | |||||
| Code | Amount | Code | Amount | ||||
1. | Sold and issued 10 common shares at par. Disregard in subsequent transaction. |
A
|
$200 |
D
|
$200 | |||
2. |
Sold and issued 5,000 shares common stock at $26 per share. |
A |
$130000 | D H | $100000 $30000 | |||
3. |
Issued a 10% stock dividend when the stock was selling at $30 per share. |
K |
$10020 |
E |
$10020 | |||
4. |
Declared a cash dividend of $1 per share on the shares outstanding. |
K |
$5010 |
E |
$5010 | |||
5. |
Paid the cash dividend of $1 per share declared earlier (see above). |
E |
$5010 |
A |
$5010 | |||
6. |
Purchased 100 shares of treasury stock at $27 per share. |
I |
$2700 |
A |
$2700 | |||
7. |
Issued a 2-for-1 stock split when the market price was $30 per share. |
|
|
|
| |||
3. The following selected information is taken from the Zachary “is” Us financial statements for the years 2010 & 2011 in millions of dollars:
Balance Sheet | 2010 | 2011 |
Cash and cash equivalents | $ 1,250 | $ 1,432 |
Short-term investments | 953 | 571 |
Accounts and other receivables | 153 | 146 |
Merchandise inventories | 1,884 | 2,094 |
Prepaid expenses and other current assets | 167 | 486 |
Total current assets | 4,407 | 4,729 |
Total property and equipment, net | 4,339 | 4,439 |
Other assets | 1,022 | 1,097 |
Total assets | 9,768 | 10,265 |
Accounts payable | 1,023 | 1,022 |
Accrued expenses and other current liabilities | 881 | 866 |
Income taxes payable | 245 | 319 |
Current portion of long-term debt | 452 | 657 |
Total current liabilities | 2,601 | 2,864 |
Total long-term liabilities | 2,842 | 3,427 |
Total liabilities | 5,443 | 6,291 |
Total stockholders’ equity | 4,325 | 3,974 |
Total liabilities and stockholders’ equity | 9,768 | 10,265 |
Income Statement |
|
|
Net sales | 11,100 | 11,320 |
Cost of sales | 7,506 | 7,646 |
Gross margin | 3,594 | 3,674 |
Total operating expenses | 3,290 | 3,026 |
Operating income (loss) | 304 | 648 |
Interest expense | (130) | (142) |
Interest and other income | 19 | 18 |
Earnings before income taxes | 193 | 524 |
Income tax expense | (59) | (130) |
Net earnings (loss) | 252 | 394 |
Tax rate | 30.6% | 32.3% |
Interest cost net of taxes (in millions) | 90.22 | 96.13 |
Statement of Cash Flows |
|
|
Net cash provided/(used) by operating activities | 746 | 801 |
Net cash provided/(used) by investing activities | (477) | (834) |
Net cash provided/(used) by financing activities | (476) | 482 |
Capital expenditures, net | (269) | (262) |
Income tax payments | (27) | (33) |
Interest payments | (143) | (117) |
Calculate the following ratios for 2011:
Ratio | 2011
|
Debt to equity |
|
Return on assets |
|
Financial leverage percentage |
|
Quality of income |
|
Profit margin |
|
Fixed asset turnover |
|
Total asset turnover |
|
Current ratio |
|
Quick ratio |
|
Receivables turnover |
|
Inventory turnover |
|
Times interest earned |
|
Capital Acquisitions |
|
SHOW ALL THE WORKING
- 10 years ago
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