P5.7 P5.7 (LO 2, 3) Groupwork (Preparation of a Statement of Cash Flows and Balance Sheet)Aero Inc. had the following balance sheet at December 31, 2019.Aero Inc.Balance SheetDecember 31, 2019$ 20,00021,200Accounts payableBonds payableCash$ 30,000Accounts receivable41,000Investments32,000Common stock100,000Plant assets (net)81,000Retained earnings23,200Land40,000$194,200$194,200During 2020, the following occurred.1. Aero liquidated its available-for-sale debt investment portfolio at a loss of $5,000.2. A tract of land was purchased for $38,000.3. An additional $30,000 in common stock was issued at par.4. Dividends totaling $10,000 were declared and paid to stock holders.5. Net income for 2020 was $35,000, including $12,000 in depreciation expense.6. Land was purchased through the issuance of $30,000 in additional bonds.7. At December 31, 2020, Cash was $70,200, Accounts Receivable was $42,000, and Accounts Payablewas $40,000.Instructionsa. Prepare a statement of cash flows for the year 2020 for Aero.b. Prepare the unclassified balance sheet as it would appear at December 31, 2020.c. Compute Aero's free cash flow and current cash debt coverage for 2020.d. Use the analysis of Aero to illustrate how information in the balance sheet and statement of cashflows helps the user of the financial statements.

Cash flow statement is a part of financial statement that shows the flows of cash into and out of…

Instructions a. Prepare a statement of cash flows for the year 2020 for Aero. b. Prepare the unclassified balance sheet as it would appear at December 31, 2020. c. Compute Aero's free cash flow and current cash debt coverage for 2020.

Instructions a. Prepare a statement of cash flows for the year 2020 for Aero. b. Prepare the unclassified balance sheet as it would appear at December 31, 2020. c. Compute Aero's free cash flow and current cash debt coverage for 2020.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter11: The Statement Of Cash Flows

Section: Chapter Questions

Problem 47E

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