Shown below and on the next page are comparative balance sheets for Matsui Company.
|
MATSUI COMPANY |
||
|
Assets |
2010 |
2009 |
|
Cash |
$ 68,000 |
$ 22,000 |
|
Accounts receivable |
85,000 |
76,000 |
|
Inventories |
170,000 |
189,000 |
|
Land |
80,000 |
100,000 |
|
Equipment |
260,000 |
200,000 |
|
Accumulated depreciation |
(66,000) |
(32,000) |
|
Total |
$597,000 |
$555,000 |
|
Liabilities and Stockholders’ Equity |
2010 |
2009 |
|
Accounts payable |
$ 39,000 |
$ 47,000 |
|
Bonds payable |
150,000 |
200,000 |
|
Common stock ($1 par) |
216,000 |
174,000 |
|
Retained earnings |
192,000 |
134,000 |
|
Total |
$597,000 |
$555,000 |
Additional information:
1. Net income for 2010 was $93,000.
2. Cash dividends of $35,000 were declared and paid.
3. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
4. Common stock was issued for $42,000 cash.
5. No equipment was sold during 2010.
Instructions
(a) Prepare a statement of cash flows for 2010 using the indirect method.
(b) Compute these cash basis ratios:
(1) Current cash debt coverage.
(2) Cash debt coverage.