Problem 13-14 Prepare a Statement of Cash Flows (Indirect Method)

Het the fina stutement Schmidt pPet 0,000 to be the minimum cash balance for operating purposes. As can only S3.000 in cash was available at the end of nt data for Schmidt, Inc., in Problem 13-12. Brian Young, president of a Statement of Cash Flows (Direct company, consid the balance she to Br oung particularly since sales and pr can be seen fr f the current year. The sharp declr ofits are at a record high. Required: e direet method, adjust the company's income statement to a cash basis for Year 2. 1. Using the cash flows for Year 2 aunlain to Brian Young why cash declined so sharply during the year he dat, from (1) above and other data from the problem as needed. prepare a statement of Prepare a Statement of Cash Flows (Indirect Method) PROBLEM 13-14 Comparative financial statements for Shores Inc. follow 14 (LO2, LO3) SHORES INC. Comparative Balance Sheet December 31, Year 2 and YearI Year 2 Assets Cash Accounts receivable Inventory Prepaid expenses Plant and equipment Less accumulated depreciation Long-term investments Total assets. 355 120 12 $ 8 $ 18 233 168 (97) 17 475 (88) 22 $1027 $833 Liabilities and Stockholder's Equity Accounts payable Accrued liabilities. Bonds payable Deferred income taxes Common stock Retained earnings. .. Total liabilities and stockholders equity $321$225 74 174 36 254 70 $833 62 288 205 106 $1,027 SHORES INC. Income Statement For the Year Ended December 3I, Year 2 $805 502 303 215 Sales Less cost of goods sold Gross margin Less operating expenses Chapter 13 SHORES INC Income Statement For the Year Ended December 31, Year 2 Net operating income Nonoperating items Gain on sale of investment $7 Loss on sale of equipment Income before taxes Less income taxes Net income 91 24 $ 67 During Year 2, the company sold some equipment for $10 that had cost $20 and on which there was accu- mulated depreciation of $6. In addition, the company sold long-term investments for $12 that had cost $5 when purchased several years ago. Cash dividends totaling $31 were paid during Year 2. 1. Using the indirect method, determine the cash provided by operating activities for Year 2. 2. Use the information in (1) above. along with an analysis of the remaining balarn e sheet accounts, to prepare a statement of cash flows for Year 2. PROBLEM 13-15 (Appendix 13A) Prepare a Statement of Cash Flows (Direct Method) LO4) Refer to the financial statement data for Shores Inc. in Problem 13-14 (LO2 Required: Using the direct method, adjust the company's income statement for Year 2 to a cash basis 2. Use the information obtained in (1) above, along with an analysis of the remaining balance sheet a counts, to prepare a statement of cash flows for Year 2. PROBLEM 13-16 Prepare and Interpret a Statement of Cash Flows (Indirect Method) (LO1, LO3) Marisa Thalmer, president of Becker Products, considers $14,000 to be the minimum cash balance for op erating purposes. As can be seen from the statements below, only $3,000 in cash was available at the of Year 2. Since the company reported a large net income for the year, and also issued both bonds a common stock, the sharp decline in cash is puzzling to Ms. Thalmer. end and BECKER PRODUCTS Comparative Balance Sheet December 31, Year 2 and Year Year 2 ear I Assets Current assets: Cash