chapter 17

E1 T23 The Serial Exercise involves a company that will be revisited throughout relevant chapters in Volume I and Volume 2. You can complete the Serial Exercises usingMyLeb Accounting. This exercise continues recordkeeping for the Canyon Canoe Company from Chapter '16. Students do not need to have completed prior exercises in order to answer this exercise. Canyon Canoe Company's comparative balance sheet is shown below. Amounts for 2024 are assumed, but include several transactions from prior chapters. CANYON CANOE COMPANY Comparative Balance Sheet December 31, 2023 and 2024 Assets 2024 2023 Current assets Cash $ 523,693 $ 12,125 Short-term investments, net 23,840 0 Accounts receivable, net 2,422 7,600 Inventory 355 0 Office supplies 60 165 Prepaid rent 0 2,000 Property, plant, and equipment Land 155,000 85,000 Building 610,000 35,000 Canoes 12,000 12,000 Office furniture and equipment 150,000 0 Less: Accum. amort. furn. and equip. 35,180 850 Total assets $ 1,442,190 $153,040 Liabilities Current liabilities Accounts payable $ 6,640 $ 3,670 Salaries payable 4,250 1,250 Note payable 15,000 0 Interest payable 350 50 Unearned revenue 500 350 Long-term liabilities Note payable 7,200 7,200 Mortgage payable 405,000 0 Bonds payable 210,000 0 Discount on bonds payable (1,270) 0 Total liabilities 647,670 12,520 Shareholders' Equity Preferred shares 70,000 0 Common shares 336,000 136,000 Retained earnings 388,520 4,520 Total shareholders' equity 794,520 140,520 Total liabilities and shareholders' equity $ 1,442,190 $153,040Additional data follow: 1. The income statement for 2024 included the following items: a. Net income, $417,000. b. Amortization expense for the year, $34,330. c. Amortization of discount on the bonds payable, $254. 2. There were no disposals of property, plant, and equipment during the year. All acquisitions of property, plant, and equipment were for cash except the land, which was acquired by issuing preferred shares. 3. The company issued bonds payable with a face value of $210,000, receiving cash of $208,476. 4. All dividends were paid in cash. 5. The common shares were issued for cash. 6. The cash receipt from the note payable in 2024 is considered a financing activity because it does not relate to operations.Required Prepare the statement of cash flows for the year ended December 31, 2024, using the indirect method. 2 3 Identify cash flows from operating, investing and financing activities, prepare a cash flow statement using the indirect method Net cash inflow from operating activities, $441,092E1813 The Serial Exercise involves a company that will be revisited throughout relevant chapters in Volume 1 and T'lfolume 2. You can complete the Serial Exercise using MyLab Accounting. This exercise continues the Canyon Canoe Companj,r situation from Chapter I 79. Students do not have to complete prior exercise in order to answer this question. The company wants to invest some of its excess cash in trading securities and is considering two investments, Paddle Company (PC) and Recreational Life 1rVests (RUE). The income statement, balance sheet, and other data for both companies follow for 2024 and 2023 as well as selected data for 2022: Income Statement Net sales revenue Cost of goods sold Gross margin Operating expenses Operating income Interest expense Income before income tax Income tax expense Net income Balance Sheet Assets Cash and cash equivalents Accounts receivable Inventory Other current assets Total current assets Longterm assets Total assets Liabilities Current liabilities Longterm liabilities Total liabilities Shareholders' Equity Common shares Retained earnings Total shareholders' equity Total liabilities and shareholder's equity Other Data Market price per share Annual dividend per share Weighted average number of shares outstanding 2024- $ 430,489 258,756 171,733 153,880 1 7,853 865 1 6,988 5,137 $ 11,851 $ 69,159 44,798 79.91 9 1 5,494 209,370 89,834 $ 299,204 $ 69,554 31,682 101,236 72.795 125,173 T368 m $ 21.38 0.32 9,000 2023 $ 425,410 256,797 W513 1 51.922 W 783 W 4,809 W 5F 70,793 44,452 66,341 1 6,264 1 97,8 50 90,776 m $ 60,232 29,936 90,1 68 80,885 1 1 7,573 TASS m $ 33.82 0 .30 8,000 2022 $ 44,104 76,363 $ 276,482 1 97,668 2024 $ 410,570 299,1 10 111,460 78,290 33,1 70 2,780 30,390 8,780 $ 21,610 $ 65,730 39,81 0 68,500 24,450 1 98,490 1 16,760 $ 315,250 $ 90,810 96,310 187,120 1 11 ,530 16,600 128,130 $ 315,250 $ 46.37 0.53 9,000 2023 $ 383,870 2 80,1 90 1 03,680 70,830 32,8 50 2,980 29,870 8,630 $ 215,240 $ 55,270 38,650 65,230 37,630 1 96,780 1 16,270 $ 313,050 $ 90,010 1 05,890 1 95,900 1 02,430 14,670 m m 55 51 .64 0.45 8,000 2022 $ 36,460 59,930 $310,640 1 03,840 \f1075 Requimd 1. Using the nancial statements given, compute the following ratios for both companies for 2024 and 2023. Assume all sales are credit sales. Round all ratios to two decimal places. a. Current ratio b. Inventory turnover c. Accounts receivable turnover :1. Gross margin percentage e. Debt ratio f. Return on assets g. Return on common shareholders' equity 11. Earnings per share i. Priceearrings ratio j. Dividend yield 2. Compare the companies' performance for 2024 and 2023. Make a recommendation to Canyon Canoe Company about investing in these companies. Which company would be a better investment, Paddle Company or Recreational Life Vests? Base your answer on ability to pay current liabilities, ability to sell merchandise and collect receivables, ability to pay longterm debt, protability, and attractiveness as an investment