1. On the basis of the following data for Teller Co. for 2008 and the preceding year ended December 31, 2008, prepare a statement of cash flows. Use the indirect method of reporting cash flows from operating activities. Assume that equipment costing $125,000 was purchased for cash and equipment costing $85,000 with accumulated depreciation of $65,000 was sold for $15,000; that the stock was issued for cash; and that the only entries in the retained earnings account were net income of $51,000 and cash dividends declared of $13,000.
Year Year
2008 2007
Cash $100,000 $ 78,000
Accounts receivable (net) 78,000 85,000
Inventories 101,500 90,000
Equipment 410,000 370,000
Accumulated depreciation (150,000) (158,000)
$539,500 $465,000
Accounts payable (merchandise creditors) $ 58,500 $ 55,000
Cash dividends payable 5,000 4,000
Common stock, $10 par 200,000 170,000
Paid in capital in excess of par
common stock 62,000 60,000
Retained earnings 214,000 176,000
$539,500 $465,000
2.
Balances of the current asset and current liability accounts at the end and beginning of the year are as follows:
End Beginning
Cash $ 62,000 $73,000
Accounts receivable (net) 75,000 60,000
Inventories 54,000 47,000
Accounts payable
(merchandise creditors) 43,000 37,000
Salaries payable 2,800 3,800
Sales (on account) 210,000
Cost of merchandise sold 70,000
Operating expenses other than depreciation 67,000
Use the direct method to prepare the cash flows from operating activities section of a statement of cash flows.
3.
The comparative balance sheet of Drango Company appears below:
HUERTO COMPANY
Comparative Balance Sheet
December 31, 2007
Assets 2007 2006
Current assets $ 340 $280
Plant assets 675 520
Total assets $1,015 $800
Liabilities and stockholders’ equity
Current liabilities $ 180 $120
Long term debt 250 160
Common stock 325 320
Retained earnings 260 200
Total liabilities and stockholders’ equity $1,015 $800
Instructions
(a) Using horizontal analysis, show the percentage change for each balance sheet item using 2006 as a base year.
(b) Using vertical analysis, prepare a common size comparative balance sheet.
4.
Selected data from the Conner Company are presented below:
Total assets $1,500,000
Average assets 1,700,000
Net income 250,000
Net sales 1,400,000
Average common stockholders’ equity 1,000,000
Net cash provided by operating activities 275,000
Shares of common stock outstanding 10,000
Instructions
Calculate the profitability ratios that can be computed from the above information.
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