Question

The comparative statements of financial position for Marwa Ld. at December 31, 2015 and 2014, are presented below:
The statement of earnings for 2015 showed the following information:
Sales ................. $ 2,000,000
Gross profit .............. 1,300,000
Operating expenses (includes depreciation
of $ 45,000) ............... 600,000
Interest expense.............. 15,000
Income tax expense........... 160,000
As well, property, plant, and equipment were acquired for $ 475,000 cash during 2015. Also during 2015, property, plant, and equipment were sold at their carrying amount in exchange for cash.
Required:
1. Prepare a complete statement of cash flows for Marwa Ltd. for the year 2015. Use the indirect method for the operating section.
2. Compute the following amounts:
a. Cash collected from customers in 2015.
b. Cash paid to suppliers of merchandise inventory in 2015.
3. Calculate and briefly explain (a) the quality of earnings ratio, and (b) free cash flow.


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  • CreatedAugust 04, 2015
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