tom epps and mary jones are examining the following statement

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tom epps and mary jones are examining the following statement of cash flows forguthrie company for the year ended january 31, 2015.guthrie companystatement of cash flowsfor the year ended january 31, 2015sources of cashfrom sales of merchandise ……………………………………….. $380,000from sale of capital stock ………………………………………… 420,000from sale of investment (purchased below) ……………………… 80,000from depreciation ………………………………………………… 55,000from issuance of note for truck ………………………………….. 20,000from interest on investments …………………………………….. 6,000total sources of cash …………………………………………….. 961,000uses of cashfor purchase of fixtures and equipment ………………………… 330,000for merchandise purchased for resale ………………………….. 258,000for operating expenses (including depreciation) ………………. 160,000for purchase of investment …………………………………….. 75,000for purchase of truck by issuance of note ……………………… 20,000for purchase of treasury stock …………………………………. 10,000for interest on note payable ……………………………………. 3,000total uses of cash ………………………………………………. 856,000net increase in cash ……………………………………………. $105,000tom claims that guthrie’s statement of cash flows is an excellent portrayal of a superb first year with cash increasing $105,000. mary replies that it was not a superb first year. rather, she says, the year was an operating failure, that the statement is presented incorrectly, and that $105,000 is not the actual increase in cash. the cash balance at the beginning of the year was $140,000.instructionswith the class divided into groups, answer the following.(a) using the data provided, prepare a statement of cash flows in proper form using the indirect method. the only noncash items in the income statement are depreciation and the gain from the sale of the investment.(b) with whom do you agree, tom or mary? explain your position.
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