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    Frank B Robinson Company : Statement of Cash Flow

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    The financial statements of Frank B Robinson Company appear below

    (See attachment)

    Additional Information
    ?          Dividends declared and paid were $ 3000
    ?          During the year equipment was sold for $ 8500 cash. The equipment cost $18,000 originally and had a book value of $8,500 at the time of sale
    ?          All depreciation are in the selling expenses category
    ?          All sales and purchases are on account

    a) Prepare a statement of cash flow using the indirect method
    b) Compute the following cash basis ratios
    1) Current cash debt coverage ratio
    2) Cash return on sales ratio
    3) Cash debt coverage ratio

    Comparative balance Sheets (31st December)
    Assets 2002 2001

    Cash 29,000 13,000

    Accounts receivable 28,000 14,000

    Merchandise inventory 25,000 35,000

    Property, plant, and equipment 60,000 78,000

    Accumulated depreciation (20,000) (24,000)
    Total 122,000 116,000
    Liabilities and Stockholders' Equity
    Accounts payable 27,000 23,000
    Income taxes payable 5,000 8,000
    Bonds payable 27,000 33,000
    Common stock 18,000 14,000
    Retained earnings 45,000 38,000
    Total 122,000 116,000

    Income Statement
    For the Year Ended December 31, 2002

    Sales 220,000

    Cost of goods sold 180,000

    Gross profit 40,000

    Selling expenses 14,000

    Administrative expenses 10,000 24,000
    Income from operations 16,000
    Interest expense 2,000
    Income before income taxes 14,000
    Income tax expense 4,000
    Net income 10,000

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    Frank B Robinson
    Statement of Cash Flow
    December 31, 2002
    Net Income $10,000
    Plus:
    Depreciation $5,500
    Profit/(Loss) on sale of equipment $0
    $5,500
    Changes in working capital:
    Increase in Accounts Receivable ($14,000)
    Decrease in Inventory $10,000
    Increase in Accounts ...

    Solution Summary

    Prepares Statement of Cash Flow and calculates ratios

    $2.49

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