Yong Company’s income statement for the year ended December 31, 2014, and its comparative balance sheets as of December 31, 2014 and 2013, follow.

During 2014, the company engaged in these transactions:
a. Sold at a gain of $7,000 furniture and fixtures that cost $35,600, on which it had accumulated depreciation of $28,800.
b. Purchased furniture and fixtures in the amount of $39,600.
c. Paid a $20,000 note payable and borrowed $40,000 on a new note.
d. Converted bonds payable in the amount of $100,000 into 4,000 shares of common stock.
e. Declared and paid $6,000 in cash dividends.

1. Using the indirect method, prepare a statement of cash flows for Yong. Include a supporting schedule of noncash investing transactions and financing transactions.
2. What are the primary reasons for Yong’s large increase in cash from 2013 to 2014, despite its low net income?
3. Compute and assess cash flow yield and free cash flow for 2014. (Round to one decimal place.) Compare and contrast what these two performance measures tell you about Yong’s cash-generatingability.

  • CreatedMarch 26, 2014
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