The comparative balance sheets for Beckwith Products Company are presented below
ID: 2485741 • Letter: T
Question
The comparative balance sheets for Beckwith Products Company are presented below.
Additional Information:
Net income for 2013 was $58,400.
Cash dividends of $12,400 were declared and paid during 2013.
During 2013, Beckwith issued $50,000 of notes payable and repaid $35,000 principal relating to notes payable.
Common stock was issued for $36,800 cash.
Depreciation expense was $19,250, and there were no disposals of equipment.
Required:
Prepare a statement of cash flows (indirect method) for Beckwith Products for 2013. Use a minus sign to indicate any decreases in cash or cash outflows.
Net cash provided by operating activities _________________
Net cash used for investing activities __________________
Net cash provided by financing activities _____________________
Net change in cash _______________
Compute the following cash-based performance measures: Use two decimal places for the adequacy ratio. Enter negative values as negative numbers.
Free cash flow $__________________
Cash flow adequacy ratio ______________% (Note: Assume that the average amount of debt maturing over the next 5 years is $85,000).
THINK ABOUT IT: What can you conclude by examining the patterns in Beckwith's cash flows?
2013 2012 Assets: Cash $ 36,950 $ 25,000 Accounts receivable 75,100 78,000 Inventory 45,300 36,000 Property, plant, and equipment 256,400 153,000 Accumulated depreciation 38,650 20,000 Total assets $ 375,100 $ 272,000 Liabilities and Equity: Accounts payable $ 13,100 $ 11,000 Interest payable 11,500 8,000 Wages payable 8,100 9,000 Notes payable 105,600 90,000 Common stock 86,800 50,000 Retained earnings 150,000 104,000 Total liabilities and equity $375,100 $ 272,000Explanation / Answer
Cash flow statement - Indirect Method Detail Amount Cash flow from operating activities Net Income 58400.00 Adjustment in net income to convert it into cash basis Depreciation Expense - Non Cash expense $19,250.00 Decrease in Accounts Receivables 2900 Increase in Inventory -9300 Increase in Accounts Payable 2100 Increase in interest payable 3500 Decrease in Wages payable -900 $ 17,550.00 Net Cash flow from operating activities - A $ 75,950.00 Cash flow from Investing activities Increase in Property, plant & equipment -103400 Net Cash flow from Investing activities - B -103400 Cash flow from Financing activities Cash Dividend paid -12400 Issued Notes Payable 50000 Repaid Notes Payable -35000 Issued common stock 36800 39400 Net Cash flow from Financing activities - C 39400 Net increase in Cash & cash equivalent $ 11,950.00 = A + B + C Add: Cash at beginning 25000 = Cash at end $36,950.00 Notes 1) Depreciation is non cash expense therfore added back to net income 2) Increase in Current assets means more cash is used in working capital, therby reducing cash & vice versa 3) Decrease in current liabilities means more cash is used in working capital & vice versa 4) increase in assets implies use of cash for purchasing assets 5) Financing activities states cash received from loans, common stock etc. & cash used to pay dividends & redemption of notes