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.
