Maurice Tutor

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    Argosy University/ Phoniex University/
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Category > Accounting Posted 16 Aug 2017 My Price 14.00

Chaplin Arts, Inc

Statement of Cash Flows: Indirect Method

p3. Chaplin Arts, Inc.’s comparative balance sheets for December 31, 2014 and 2013 follow.

 

Chaplin Arts, Inc.

Comparative Balance Sheets December 31, 2014 and 2013

2014                        2013

Assets

 

 

Cash

$  94,560

 

$  27,360

Accounts receivable (net)

102,430

 

75,430

Inventory

112,890

 

137,890

Prepaid expenses

—

 

20,000

Land

25,000

 

—

Building

137,000

 

—

Accumulated depreciation—building

(15,000)

 

—

Equipment

33,000

 

34,000

Accumulated depreciation—equipment

(14,500)

 

(24,000)

Patents

4,000

 

6,000

Total assets

$479,380

 

$276,680

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

$  10,750

 

$  36,750

Notes payable (current)

10,000

 

—

Accrued liabilities

—

 

12,300

Mortgage payable

162,000

 

—

Common stock, $10 par value

180,000

 

150,000

Additional paid-in capital

57,200

 

37,200

Retained earnings

     59,430

 

     40,430

Total liabilities and stockholders’ equity

$479,380

 

$276,680

The following additional information about Chaplin Arts’s operations during 2013 is avail- able: (a) net income, $28,000; (b) building and equipment depreciation expense  amounts,

$15,000 and $3,000, respectively; (c) equipment that cost $13,500 with accumulated depre- ciation of $12,500 sold at a gain of $5,300; (d) equipment purchases, $12,500; (e) patent amortization, $3,000; purchase of patent, $1,000; (f) funds borrowed by issuing notes pay- able, $25,000; notes payable repaid, $15,000; (g) land and building purchased for $162,000 by signing a mortgage for the total cost; (h) 1,500 shares of $20 par value common stock issued for a total of $50,000; and (i) paid cash dividends, $9,000.

reQUIreD

1.    Using the indirect method, prepare a statement of cash flows for Chaplin Arts.

2.    aCCounting ConneCtion ▶ Why did Chaplin Arts have an increase in cash of

$67,200 when it recorded net income of only $28,000? Discuss and interpret.

3.    Business appliCation ▶ Compute and assess cash flow yield and free cash flow for 2014. (Round to one decimal place.) What is your assessment of Chaplin Arts’ cash-generating ability?

Answers

Maurice Tutor
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Status NEW Posted 16 Aug 2017 11:08 PM My Price 14.00

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