The following additional information was taken from the company's records: a. Long-term investments (available-for-sale securities) that...

  

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The following additional information was taken from the company's records: a. Long-term investments (available-for-sale securities) that cost $70,000 were sold at a gain of $12,500; additional long-term investments were made in the amounts of $20,000. b. Five acres of land were purchased for $25,000 to build a parking lot. c. Equipment that cost $37,500 with accumulated depreciation of $25,300 was sold at a loss of $2,300; new equipment costing $30,000 was purchased. d. Notes payable in the amount of $100,000 were repaid; an additional $30,000 was borrowed by signing notes payable. e. Bonds payable in the amount of $100,000 were converted into 6,000 shares of common stock. f. The Mortgage Payable account was reduced by $20,000 during the year. g. Cash dividends declared and paid were $50,000. TO DO: 1. Prepare a schedule of cash flows from operating activities using the (a) indirect method and (b) direct method. 2. Prepare a statement of cash flows using the indirect method. 3. Compute cash flow yield, cash flows to sales, cash flows to assets, and free cash flow for 20x2. Northwest Corporation Income Statement For the Year Ended December 31, 20x2 Net Sales Cost of Goods Sold Gross Margin Operating Expenses (including Dep Exp of $12,000 on Bldgs and $23,100 on Equip, Amortization Expense of $4,800) Operating Income Other Income (Expenses) Interest Expense Dividend Income Gain on Sale of Investments Loss on Disposal of Equipment Income Before Income Taxes Income Taxes Net Income ($55,000) 3,400 12,500 (2,300) $1,650,000 920,000 $730,000 470,000 $ 260,000 (41,400) $ 218,600 52,200 $ 166,400 Cash Accounts Receivable (net) Inventory Prepaid Expenses Long-Term Investments Land Buildings Accumulated Depreciation, Buildings Equipment Accumulated Depreciation, Equipment Intangible Assets Total Assets Northwest Corporation Comparative Balance Sheets December 31m 20x2 and 20x1 Accounts Payable Accrued Liabilities Income Taxes Payable Notes Payable Bonds Payable 20x2 Assets 20x1 $ 115,850 $ 121,850 296,000 314,500 322,000 301,000 (43,400) 19,200 $1,434,180 $1,482,780 Liabilities and Stockholders' Equity Change ($ 6,000) (18,500) 21,000 7,800 5,800 2,000 Increase 36,000 86,000 (50,000) Decrease 150,000 125,000 25,000 Increase 462,000 462,000 (91,000) (79,000) 159,730 167,230 (45,600) 24,000 ---- ---- Increase or Decrease Decrease Decrease Increase $ 48,600 $ 133,750 $ 233,750 ($100,000) 5,000 5,000 20,000 20,000 Increase 75,700 145,700 (70,000) Decrease 210,000 310,000 (100,000) Decrease Mortgage Payable 330,000 350,000 (20,000) Decrease Common Stock, $10 par value 360,000 300,000 60,000 Increase Paid-in-Capital in Excess of Par Value 90,000 50,000 40,000 Increase Retained Earnings 209,730 93,330 116,400 Increase Total Liabilities and Stockholders' Equity $1,434,180 $1,482,780 ($ 48,600) (12,000) Increase (7,500) Decrease 2,200 Decrease (4,800) Decrease Decrease Increase The following additional information was taken from the company's records: a. Long-term investments (available-for-sale securities) that cost $70,000 were sold at a gain of $12,500; additional long-term investments were made in the amounts of $20,000. b. Five acres of land were purchased for $25,000 to build a parking lot. c. Equipment that cost $37,500 with accumulated depreciation of $25,300 was sold at a loss of $2,300; new equipment costing $30,000 was purchased. d. Notes payable in the amount of $100,000 were repaid; an additional $30,000 was borrowed by signing notes payable. e. Bonds payable in the amount of $100,000 were converted into 6,000 shares of common stock. f. The Mortgage Payable account was reduced by $20,000 during the year. g. Cash dividends declared and paid were $50,000. TO DO: 1. Prepare a schedule of cash flows from operating activities using the (a) indirect method and (b) direct method. 2. Prepare a statement of cash flows using the indirect method. 3. Compute cash flow yield, cash flows to sales, cash flows to assets, and free cash flow for 20x2. Northwest Corporation Income Statement For the Year Ended December 31, 20x2 Net Sales Cost of Goods Sold Gross Margin Operating Expenses (including Dep Exp of $12,000 on Bldgs and $23,100 on Equip, Amortization Expense of $4,800) Operating Income Other Income (Expenses) Interest Expense Dividend Income Gain on Sale of Investments Loss on Disposal of Equipment Income Before Income Taxes Income Taxes Net Income ($55,000) 3,400 12,500 (2,300) $1,650,000 920,000 $730,000 470,000 $ 260,000 (41,400) $ 218,600 52,200 $ 166,400 Cash Accounts Receivable (net) Inventory Prepaid Expenses Long-Term Investments Land Buildings Accumulated Depreciation, Buildings Equipment Accumulated Depreciation, Equipment Intangible Assets Total Assets Northwest Corporation Comparative Balance Sheets December 31m 20x2 and 20x1 Accounts Payable Accrued Liabilities Income Taxes Payable Notes Payable Bonds Payable 20x2 Assets 20x1 $ 115,850 $ 121,850 296,000 314,500 322,000 301,000 (43,400) 19,200 $1,434,180 $1,482,780 Liabilities and Stockholders' Equity Change ($ 6,000) (18,500) 21,000 7,800 5,800 2,000 Increase 36,000 86,000 (50,000) Decrease 150,000 125,000 25,000 Increase 462,000 462,000 (91,000) (79,000) 159,730 167,230 (45,600) 24,000 ---- ---- Increase or Decrease Decrease Decrease Increase $ 48,600 $ 133,750 $ 233,750 ($100,000) 5,000 5,000 20,000 20,000 Increase 75,700 145,700 (70,000) Decrease 210,000 310,000 (100,000) Decrease Mortgage Payable 330,000 350,000 (20,000) Decrease Common Stock, $10 par value 360,000 300,000 60,000 Increase Paid-in-Capital in Excess of Par Value 90,000 50,000 40,000 Increase Retained Earnings 209,730 93,330 116,400 Increase Total Liabilities and Stockholders' Equity $1,434,180 $1,482,780 ($ 48,600) (12,000) Increase (7,500) Decrease 2,200 Decrease (4,800) Decrease Decrease Increase

Answer rating: 100% (QA)

1 a Indirect method Operating activities Net income 200000 Adjustments Depreciation expense 10000 Ga... View the full answer