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...
-
Consider 6 identical balls and 3 distinguishable boxes. a. In how many ways can we put the 6 identical balls into the 3 distinguishable boxes? b. If each box gets at least 1 ball?
-
Fallen Company commonly issues long-term notes payable to its various lenders. Fallen has had a pretty good credit rating such that its effective borrowing rate is quite low (less than 8% on an...
-
99 percent per month. In 2014, Boling resolved his suit against the gas can manufacturer. Shortly thereafter, Prospect sent Boling a Schedule of Purchases, asserting that Boling owed Prospect...
-
Brainiac Company purchased a delivery truck for $30,000 on January 1, 2010.The truck has an expected salvage value of $2,000, and is expected to be driven 100,000 miles over its estimated useful life...
-
help me respond to this, Can I request a little insight on this zoom meetings attendees and the intended end result? Will this information conclusion be going back to the County auditors in a report?...
-
On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:...
-
Given the following code: public static int indexOf(int value, int[] array) { for (int i=0; i array.length; i++) { if(array[i] = value) return i; } return -1; } What is the value of x after the...
-
Describe the concept of operations functions, supply chain strategy, process selection, forecasting, capacity planning, production forecast methods, and schedule operations Define different...
-
Anita, Inc. is considering the following investments. The current rate on Treasury bills is 7 percent, and the expected return for the market is 14.5 percent. Using the CAPM, what rates of return...
-
Jeremiah drew a square ( 3)/(4) inch wides. What is the area of the square?
-
Describe the process of mechanical reverse engineering a as it relates to Reverse Software engineering. Describe the process of reverse engineering an electrical Key entry system. (Any System You...
-
A basketball court is 84 feet long. How does 84 teeth compare to 30 yards? Explain how you know. how do you now .
-
The following code is supposed to display the positive even numbers less than 12. That is, it will output the numbers 2, 4, 6, 8 and 10. However, there is a logical error in the code. Explain what...
-
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 joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement is known as: a. Joint...
-
To classify a joint arrangement as either a joint operation or a joint venture, the Islamic bank should consider: a. Structure and legal form of any separate vehicle b. Expenses, including its share...
-
To ensure that sufficient cash is available at any point in time to fund the withdrawal of cash by its clients, banks use: a. Current account b. Restricted investment account c. Unrestricted...
Study smarter with the SolutionInn App