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Statement of Cash Flows for Taguchi Company

I need help with the attached information.

Here are comparative balance sheets for Taguchi Company.

TAGUCHI COMPANY
Comparative Balance Sheets
December 31

Assets 2007 2006
Cash $ 73,000 $ 22,000
Accounts receivable 85,000 76,000
Inventories 170,000 189,000
Land 75,000 100,000
Equipment 260,000 200,000
Accumulated depreciation (66,000) (32,000)
Total $597,000 $555,000

Liabilities and Stockholders' Equity
Accounts payable $ 39,000 $ 47,000
Bonds payable 150,000 200,000
Common stock ($1 par) 216,000 174,000
Retained earnings 192,000 134,000
Total $597,000 $555,000

Additional information:
1. Net income for 2007 was $103,000.
2. Cash dividends of $45,000 were declared and paid.
3. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
4. Common stock was issued for $42,000 cash.
5. No equipment was sold during 2007.

Instructions
(a) Prepare a statement of cash flows for 2007 using the indirect method.
(b) Compute these cash-basis ratios:
(1) Current cash debt coverage.
(2) Cash debt coverage.

Attachments

Solution Summary

This solution constructs a cash flow statement for 2007 with account changes on the balance sheet. The indirect method is used and the cash-basis ratios is calculated as well as current cash debt coverage.

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