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Frank B Robinson Company : Statement of Cash Flow

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

Attachments

Solution Preview

see the file attached

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

$2.19