Statement of Cash Flows (Indirect Method) The Wolff Company’s income statement and comparative balance sheets at December 31 of 2016 and 2015 are shown below: WOLFF COMPANY Income Statement For the Year Ended December 31, 2016 Sales Revenue $645,000 Cost of Goods Sold $430,000 Wages Expense 86,000 Insurance Expense 12,000 Depreciation Expense 13,000
Not Graded
Statement of
| WOLFF COMPANY Income Statement For the Year Ended December 31, 2016 |
||
|---|---|---|
| Sales Revenue | $645,000 | |
| Cost of Goods Sold | $430,000 | |
| Wages Expense | 86,000 | |
| Insurance Expense | 12,000 | |
| 13,000 | ||
| Interest Expense | 12,000 | |
| Income Tax Expense | 29,000 | 582,000 |
| Net Income | $63,000 |
| WOLFF COMPANY Balance Sheets |
||
|---|---|---|
| Dec. 31, 2016 | Dec. 31, 2015 | |
| Assets | ||
| Cash | $52,000 | $8,000 |
| Accounts Receivable | 41,000 | 32,000 |
| Inventory | 90,000 | 60,000 |
| Prepaid Insurance | 5,000 | 7,000 |
| Plant Assets | 219,000 | 195,000 |
| Accumulated Depreciation | (68,000) | (55,000) |
| Total Assets | $339,000 | $247,000 |
| Liabilities and |
||
| Accounts Payable | $7,000 | $10,000 |
| Wages Payable | 9,000 | 6,000 |
| Income Tax Payable | 6,000 | 7,000 |
| Bonds Payable | 141,000 | 75,000 |
| Common Stock | 90,000 | 90,000 |
| 86,000 | 59,000 | |
| Total Liabilities and Stockholders’ Equity | $339,000 | $247,000 |
Cash dividends of $36,000 were declared and paid during 2016. 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 occurred during 2016.
b. Prepare a statement of cash flows using the indirect method.
c. Compute
d. Compute the operating‑cash‑flow‑to‑current‑liabilities ratio.
e. Compute the operating‑cash‑flow‑to‑capital‑expenditures ratio.
a. Change in Cash during 2016 $Answer Answer
b. Use a negative sign with
| WOLFF COMPANY Statement of Cash Flows For Year Ended December 31, 2016 |
||
|---|---|---|
| Cash Flow from Operating Activities | ||
| Net Income | Answer | |
| Add (deduct) items to convert net income to cash basis | ||
| Depreciation | Answer | |
| Accounts Receivable | Answer | Answer |
| Inventory | Answer | Answer |
| Prepaid Insurance | Answer | Answer |
| Accounts Payable | Answer | Answer |
| Wages Payable | Answer | Answer |
| Income Tax Payable | Answer | Answer |
| Cash Flow Provided by Operating Activities | Answer | |
| Cash Flow from Investing Activities | ||
| Purchase of Plant Assets | Answer | |
| Cash Flow from Financing Activities | ||
| Issuance of Bonds Payable | Answer | |
| Payment of Dividends | Answer | |
| Cash Provided by Financing Activities | Answer | |
| Net Change in Cash | Answer | |
| Cash at Beginning of Year | Answer | |
| Cash at End of Year | Answer |
c. Free cash flow $Answer
d. Operating-cash-flow-to-current-liabilities ratio.
Round answer to two decimal places.
Answer
e. Operating-cash-flow-to-capital-expenditures ratio.
Round answer to two decimal places.
Answer
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