Exercise 5-18 The comparative balance sheets of Madrasah Corporation at the begi
ID: 2488940 • Letter: E
Question
Exercise 5-18 The comparative balance sheets of Madrasah Corporation at the beginning and end of the year 2014 appear below MADRASAH CORPORATION BALANCE SHEETS Dec. 31, 2014 Jan. 1, 2014 Inc./De Assets Cash Accounts receivable Equipment Less: Accumulated Depreciation- Equipment $22,087 108,087 41,087 (17,000 ) $154,261 $14,408 89,408 23,408 (11,000) $7,679 Inc. 18,679 Inc. 17,679 Inc. 6,000 Inc. $116,224 Total Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $22,087 102,087 30,087 $154,261 $16,408 81,408 18,408 $116,224 5,679 Inc. 20,679 Inc. 11,679 Inc. Total Net income of $46,087 was reported, and dividends of $34,408 were paid in 2014. New equipment was purchased and none was soldExplanation / Answer
Cash Flows from Operating Activities: Net Income + Non-Cash Expenses: (Depreciation, Depletion & Amortization Expense) + Non-Operating Losses: (Loss on Sale of Non-Current Assets) Non-Operating Gains: (Gain on Sale of Non-Current Assets) + Decrease in Current Assets: (Accounts Receivable, Prepaid Expenses, Inventory etc.) Increase in Current Assets + Increase in Current Liabilities: (Accounts Payable, Accrued Liabilities, Income Tax Payable etc.) Decrease in Current Liabilities = Net Cash Flow from Operating Activities Net income 46,087 Add Depreciation 6,000 Add decrease in current assets 0 Less increase in current assets (18,679) Add increase in current liabilities 5,679 Cashflow from operating activities 39,087 Cashflow from financing activities Dividend paid (34,408) Increase in common stock 20,679 Cashflow from financing activities (13,729) Cashflow from investing actiivities Equipment (17,679) Total cash flow 7,679 Which is equal to incrase in cash during the year December January Current assets 130,174.00 103,816.00 current liabilities 22,087.00 16,408.00 Current ratio 5.89 6.33