Question 2: The 2015 comparative income statement and the 2015 comparative balance sheet of Golf America,...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 2: The 2015 comparative income statement and the 2015 comparative balance sheet of Golf America, Inc. have just been distributed at a meeting of the company's Board of Directors. The members of the board raise a fundamental question: Why is the cash balance so low? This question is especially hard to understand because 2015 showed record profits. As the controller of the company, you must answer the question. GOLF AMERICA, INC. Income Statement Year Ended December 31, 2015 (in thousands) Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses: Salaries Expense Depreciation Expense Total Operating Expenses Operating Income Other Revenues and (Expenses): Gain on Sale of Equipment (sales price, $33) Loss on Sale of Land (sales price, $61) Interest Expense Amortization Expense Total Other Revenues and (Expenses) Net Income 2015 $444 221 223 48 46 94 129 0 0 (13) (11) (24) $ 105 2014 $310 162 148 28 22 50 98 18 (35) (20) (11) (48) $ 50 Current Assets: Cash Accounts Receivable Merchandise Inventory GOLF AMERICA, INC. Comparative Balance Sheet December 31, 2015 and 2014 (in thousands) Long-term Assets: Plants Assets, Net Patents Long-term Investments Total Assets Current Liabilities: Accounts Payable Accrued Liabilities Long-term Liabilities: Notes Payable Total Liabilities Common Stock Retained Earnings Requirements Assets Liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity 2015 5 25 72 194 125 177 31 $ 624 $ 63 12 179 254 149 221 370 $ 624 2014 $ 63 61 181 61 188 0 $ 554 $ 56 17 264 337 61 156 217 $ 554 1. Prepare a statement of cash flows for 2015 in the format that best shows the relationship between net income and net operating cash flow. The company sold no plant assets or long-term investments and issued no notes payable during 2015. There were no non-cash investing and financing transactions during the year. Show all amounts in thousands. (10 Marks) 2. Considering net income and the company's cash flows during 2015, was it a good year or a bad year? Give your reasons. (5 Marks) Question 2: The 2015 comparative income statement and the 2015 comparative balance sheet of Golf America, Inc. have just been distributed at a meeting of the company's Board of Directors. The members of the board raise a fundamental question: Why is the cash balance so low? This question is especially hard to understand because 2015 showed record profits. As the controller of the company, you must answer the question. GOLF AMERICA, INC. Income Statement Year Ended December 31, 2015 (in thousands) Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses: Salaries Expense Depreciation Expense Total Operating Expenses Operating Income Other Revenues and (Expenses): Gain on Sale of Equipment (sales price, $33) Loss on Sale of Land (sales price, $61) Interest Expense Amortization Expense Total Other Revenues and (Expenses) Net Income 2015 $444 221 223 48 46 94 129 0 0 (13) (11) (24) $ 105 2014 $310 162 148 28 22 50 98 18 (35) (20) (11) (48) $ 50 Current Assets: Cash Accounts Receivable Merchandise Inventory GOLF AMERICA, INC. Comparative Balance Sheet December 31, 2015 and 2014 (in thousands) Long-term Assets: Plants Assets, Net Patents Long-term Investments Total Assets Current Liabilities: Accounts Payable Accrued Liabilities Long-term Liabilities: Notes Payable Total Liabilities Common Stock Retained Earnings Requirements Assets Liabilities Stockholders' Equity Total Stockholders' Equity Total Liabilities and Stockholders' Equity 2015 5 25 72 194 125 177 31 $ 624 $ 63 12 179 254 149 221 370 $ 624 2014 $ 63 61 181 61 188 0 $ 554 $ 56 17 264 337 61 156 217 $ 554 1. Prepare a statement of cash flows for 2015 in the format that best shows the relationship between net income and net operating cash flow. The company sold no plant assets or long-term investments and issued no notes payable during 2015. There were no non-cash investing and financing transactions during the year. Show all amounts in thousands. (10 Marks) 2. Considering net income and the company's cash flows during 2015, was it a good year or a bad year? Give your reasons. (5 Marks)
Expert Answer:
Answer rating: 100% (QA)
Cash flow from Operating Activities Particulars Amount in Net Income 105 Add Depreciation 46 Add Amortization 11 Less Increase in Inventory 13 Less In... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
On Jan 1, ABC issues a bond with a face value of 1,000, 6% coupon, 3 year term, payable semi-annually each July 1 and Jan 1. The market requires a 4% return. What is the net book value of the bond...
-
A bond with a face value of $ 280,000 and a quoted price of 92 has a selling price of?
-
The company has bonds outstanding with a face value of $50,000 and an unamortized premium of $2,350 at the beginning of the year and $2,000 as of the end of the year. Sales (all for cash) were...
-
1. Can you explain why business majors apparently study less, on average, than students in other majors? 2. Can you explain why business students writing and reasoning skills apparently increase less...
-
What are some typical MNE goals? Identify and briefly describe four major types.
-
Analyze each situation and indicate the correct dollar amount for the adjusting entry. 1. Ending inventory of supplies is $95. 2. Amount of supplies used is $280. (Balance Sheet) (Income Statement)...
-
Red Sky Delivery performs last-mile delivery services for online retailers such as Amazon. Red Sky employs delivery drivers who deliver packages to individual residence and business locations from a...
-
The Escargot is a small French restaurant with 6 waiters and waitresses. The average service time at the restaurant for a table (of any size) is 80 minutes (exponentially distributed). The restaurant...
-
Target behavior: Engaging in physical activity Goal: Engages in physical activity 3 days a week for 60 minutes each day Antecedent-based interventions: Visual schedules, priming, environmental...
-
Sundream Travel Agency Ltd. is a company that sells vacation packages and has a new Chief Executive Officer (CEO) who is reviewing the draft December 31 year-end financial statements prepared by the...
-
How do organization/management theorists define behavior and differentiate between inherited and operant behaviors?
-
A retaining wall is shown in Figure 14.36. For each problem, determine the Rankine active force, Pa, per unit length of the wall and the location of the resultant. H H, Y V2 12 m 4 m 17 kN/m 23.2...
-
What is the agency problem? What steps can be taken to solve it?
-
Why does differentiation occur in an organization? Distinguish between vertical and horizontal differentiation.
-
What are the principal differences between a functional structure and a multidivisional structure? Why does a company change from a functional to a multidivisional structure?
-
Why might an organization prefer to use a product team structure rather than a matrix structure?
-
You've worked out a line of credit arrangement that allows you to borrow up to $60 million at any time. The interest rate is .58 percent per month. In addition, 6 percent of the amount that you...
-
Find the center of mass of a thin triangular plate bounded by the y-axis and the lines y = x and y = 2 - x if (x, y) = 6x + 3y + 3.
-
Machines that have the following costs are under consideration for a robotized welding process. Using an interest rate of 10% per year, determine which alternative should be selected on the basis of...
-
For the estimates in Problem use a spreadsheet-based analysis to determine the first cost for the augmentation of the current system that will make the defender and challenger break even. Is this a...
-
Wheeling-Pittsburgh Steel is investigating whether it should replace some of its basic oxygen furnace equipment now or wait to do it later. The cost later (i.e., 3 years from now) is estimated to be...
-
(a) A car is speeding up in the negative \(x\) direction. In what direction do \(\vec{a}\) and \(\vec{v}\) point? (b) To which of the four graphs in Figures 3 . 2 and 3 . 3 does the situation...
-
The \(x\) component of the velocity of a car changes from \(-10 \mathrm{~m} / \mathrm{s}\) to \(-2.0 \mathrm{~m} / \mathrm{s}\) in \(10 \mathrm{~s}\). (a) Is the car traveling in the positive or...
-
A classmate leaves a message on your voice mail betting that you cannot throw a stone high enough so it lands on the roof of a 20 -m-high building. As you stare out of your window pondering whether...
Study smarter with the SolutionInn App