I need help on (d) and (e) of this: I need help on this: The Arctic Company's income statement and comparative balance sheets at December 31 of 2019 and 2018 are shown below: Sales revenue $645,000 Cost of goods sold $430,000 Wages expense 91,000 Insurance expense 12,000 Depreciation expense 13,000 Interest expense 15,000 Income tax expense 29,000 590,000 Net income 55,000 Balance sheet: Dec 31, 2019 Dec 31, 2018 Assets Cash $41,000 $8,000 Accounts receivable 41,000 32,000 Inventory 90,000 65,000 Prepaid insurance 5,000 7,000 Plant assets 219,000 202,000 Accumlated depreciation (68,000) (55,000) Total assests $328,000 $259,000 Liabilities and Stockholer's equitu Accounts payable 7,000 10,000 Wages payable 10,000 6,000 Income tax payable 6,000 7,000 Bonds payable 141,000 87,000 Common stock 90,000 90,000 Retained earnings 74,000 59,000 Total liabilities and stockholder's equity $328,000 $259,000 Cash dividends of $40,000 were declared and paid during 2019. Plant assets were purchased for cash and bonds payable were issued for cash. Bond interest is paid semi-annually on June 30 and December 31. Accounts payable relate to merchandise purchases. Required: a) Calculate the change in cash that occured during 2019 b) Prepare a statement of cash flows using the indirect method c) Computer free cash flow d) Compute the operating-cash-flow-to-current-liabilities ratio. e) Compute the operating-cash-flow-to-capital-expenditures ratio.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
I need help on (d) and (e) of this:
I need help on this:
The Arctic Company's income statement and comparative balance sheets at December 31 of 2019 and 2018 are shown below:
| Sales revenue | $645,000 | |
| Cost of goods sold | $430,000 | |
| Wages expense | 91,000 | |
| Insurance expense | 12,000 | |
| 13,000 | ||
| Interest expense | 15,000 | |
| Income tax expense | 29,000 | 590,000 |
| Net income | 55,000 |
Balance sheet:
| Dec 31, 2019 | Dec 31, 2018 | |
| Assets | ||
| Cash | $41,000 | $8,000 |
| Accounts receivable | 41,000 | 32,000 |
| Inventory | 90,000 | 65,000 |
| Prepaid insurance | 5,000 | 7,000 |
| Plant assets | 219,000 | 202,000 |
| Accumlated depreciation | (68,000) | (55,000) |
| Total assests | $328,000 | $259,000 |
| Liabilities and Stockholer's equitu | ||
| Accounts payable | 7,000 | 10,000 |
| Wages payable | 10,000 | 6,000 |
| Income tax payable | 6,000 | 7,000 |
| Bonds payable | 141,000 | 87,000 |
| Common stock | 90,000 | 90,000 |
| 74,000 | 59,000 | |
| Total liabilities and |
$328,000 | $259,000 |
Cash dividends of $40,000 were declared and paid during 2019. Plant assets were purchased for cash and bonds payable were issued for cash. Bond interest is paid semi-annually on June 30 and December 31. Accounts payable relate to merchandise purchases.
Required:
a) Calculate the change in cash that occured during 2019
b) Prepare a statement of cash flows using the indirect method
c) Computer
d) Compute the operating-cash-flow-to-
e) Compute the operating-cash-flow-to-capital-expenditures ratio.
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