Problem 12-7A Presented below are the financial statements of Whispering Winds C
ID: 2590962 • Letter: P
Question
Problem 12-7A
Presented below are the financial statements of Whispering Winds Company.
Whispering Winds Company
Comparative Balance Sheets
December 31
Assets
2017
2016
Cash
$ 81,900
$ 46,800
Accounts receivable
46,800
32,760
Inventory
65,520
46,800
Property, plant, and equipment
140,400
182,520
Accumulated depreciation
(74,880
)
(56,160
)
Total
$259,740
$252,720
Liabilities and Stockholders’ Equity
Accounts payable
$ 44,460
$ 35,100
Income taxes payable
16,380
18,720
Bonds payable
39,780
77,220
Common stock
42,120
32,760
Retained earnings
117,000
88,920
Total
$259,740
$252,720
Whispering Winds Company
Income Statement
For the Year Ended December 31, 2017
Sales revenue
$566,280
Cost of goods sold
409,500
Gross profit
156,780
Selling expenses
$42,120
Administrative expenses
14,040
56,160
Income from operations
100,620
Interest expense
7,020
Income before income taxes
93,600
Income tax expense
18,720
Net income
$ 74,880
Additional data:
1.
Depreciation expense was $40,950.
2.
Dividends declared and paid were $46,800.
3.
During the year equipment was sold for $19,890 cash. This equipment cost $42,120 originally and had accumulated depreciation of $22,230 at the time of sale.
IE
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Compute Free Cash Flow.
Problem 12-7A
Presented below are the financial statements of Whispering Winds Company.
Whispering Winds Company
Comparative Balance Sheets
December 31
Assets
2017
2016
Cash
$ 81,900
$ 46,800
Accounts receivable
46,800
32,760
Inventory
65,520
46,800
Property, plant, and equipment
140,400
182,520
Accumulated depreciation
(74,880
)
(56,160
)
Total
$259,740
$252,720
Liabilities and Stockholders’ Equity
Accounts payable
$ 44,460
$ 35,100
Income taxes payable
16,380
18,720
Bonds payable
39,780
77,220
Common stock
42,120
32,760
Retained earnings
117,000
88,920
Total
$259,740
$252,720
Whispering Winds Company
Income Statement
For the Year Ended December 31, 2017
Sales revenue
$566,280
Cost of goods sold
409,500
Gross profit
156,780
Selling expenses
$42,120
Administrative expenses
14,040
56,160
Income from operations
100,620
Interest expense
7,020
Income before income taxes
93,600
Income tax expense
18,720
Net income
$ 74,880
Additional data:
1.
Depreciation expense was $40,950.
2.
Dividends declared and paid were $46,800.
3.
During the year equipment was sold for $19,890 cash. This equipment cost $42,120 originally and had accumulated depreciation of $22,230 at the time of sale.
IE
Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Compute Free Cash Flow.
Explanation / Answer
Whispering Winds Company
Cash flow statement for the year ended December 31, 2017
Cash flow from operations:
Net Income
$74,880
Add/Deduct items
Depreciation
$40,950
Increase in Accounts Receivable
($14,040)
Increase in Inventory
($18,720)
Increase in Accounts Payable
$9,360
Decrease in Income Taxes Payable
($2,340)
Cash Flow from Operations
$90,090
Cash flow from financing activities:
Sale of Equipment
$19,890
Cash Flow from Financing Activities
$19,890
Cash flow from investing activities:
Bonds Paid
($37,440)
Issue of Common Stock
$9,360
Dividends paid
($46,800)
Cash Flow from Investing Activities
($74,880)
Increase in Cash
$35,100
Beginning Cash Balance
$46,800
Ending Cash Balance
$81,900
Note:
The sale of equipment resulted in no gain or loss, shown as follows,
Cost of equipment $42,120
Less: accumulated depreciation $22,230
Book value $19,890
Sale proceeds $19,890
Gain/Loss 0
Whispering Winds Company
Cash flow statement for the year ended December 31, 2017
Cash flow from operations:
Net Income
$74,880
Add/Deduct items
Depreciation
$40,950
Increase in Accounts Receivable
($14,040)
Increase in Inventory
($18,720)
Increase in Accounts Payable
$9,360
Decrease in Income Taxes Payable
($2,340)
Cash Flow from Operations
$90,090
Cash flow from financing activities:
Sale of Equipment
$19,890
Cash Flow from Financing Activities
$19,890
Cash flow from investing activities:
Bonds Paid
($37,440)
Issue of Common Stock
$9,360
Dividends paid
($46,800)
Cash Flow from Investing Activities
($74,880)
Increase in Cash
$35,100
Beginning Cash Balance
$46,800
Ending Cash Balance
$81,900