The 2018 income statement and the 2018 comparative balance sheet of Ghent River Camp, Inc., have just
Question:
The 2018 income statement and the 2018 comparative balance sheet of Ghent River Camp, Inc., have just been distributed at a meeting of the camp’s board of directors. The directors raise a fundamental question: Why is the cash balance so low? This question is especially troublesome since 2018 showed record profits. As the controller of the company, you must answer the question.
Requirements
1. Prepare a statement of cash flows for 2018 in the format that best shows the relationship between net income and operating cash flow. The company sold no plant assets or longterm investments and issued no notes payable during 2018. There were no noncash investing and financing transactions during the year. Show all amounts in thousands.
2. Answer the board members’ question: Why is the cash balance so low? Point out the two largest cash payments during 2018. (Challenge)
3. Considering net income and the company’s cash flows during 2018, was it a good year or a bad year? Give your reasons.
Step by Step Answer:
Financial Accounting
ISBN: 978-0134725987
12th edition
Authors: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.