Shown on the next page are the financial statements of Klemmer Company. 1 answer below »Shown on the next page are the financial statements of Klemmer Company. 1 answer below »

Shown on the next page are the financial statements of Klemmer Company.

KLEMMER COMPANY
Comparative Balance Sheets
December 31

Assets

2012

2011

Cash

$ 25,000

$ 33,000

Accounts receivable

23,000

14,000

Inventory

41,000

25,000

Property, plant, and equipment

$ 73,000

$ 78,000

Less: Accumulated depreciation

(27,000)

46,000

(24,000)

54,000

Total

$135,000

$126,000

Liabilities and Stockholders" Equity

Accounts payable

$ 23,000

$ 46,000

Income taxes payable

26,000

23,000

Bonds payable

20,000

10,000

Common stock

25,000

25,000

Retained earnings

41,000

22,000

Total

$135,000

$126,000

KLEMMER COMPANY
Income Statement
For the Year Ended December 31, 2012

Sales

$295,000

Cost of goods sold

194,000

Gross profit

101,000

Selling expenses

$28,000

Administrative expenses

9,000

37,000

Income from operations

64,000

Interest expense

7,000

Income before income taxes

57,000

Income tax expense

13,000

Net income

$ 44,000

Additional data:

1. Depreciation expense was $6,000.

2. Dividends of $25,000 were declared and paid.

3. During the year, equipment was sold for $10,000 cash. This equipment cost $13,000 originally and had accumulated depreciation of $3,000 at the time of sale.

4. Additional equipment was purchased for $8,000 cash.

Instructions

(a) Prepare a statement of cash flows using the indirect method.

(b) Compute these cash-based measures:

(1) Current cash debt coverage ratio.

(2) Cash debt coverage ratio.

(3) Free cash flow.

NEED HELP WITH SUCH A TASK? WE HAVE THE BEST TUTORS FOR YOU. ORDER NOW FROM 10$/PG