2.99 See Answer

Question: Shown below and on the next page

Shown below and on the next page are comparative balance sheets for Schmitt Company.
Shown below and on the next page are comparative balance sheets for Schmitt Company.


Additional information:
1. Net income for 2014 was $93,000.
2. Depreciation expense was $34,000.
3. Cash dividends of $39,000 were declared and paid.
4. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
5. Common stock was issued for $42,000 cash.
6. No equipment was sold during 2014.
7. Land was sold for its book value.

Instructions:
(a) Prepare a statement of cash flows for 2014 using the indirect method.
(b) Compute these cash-based ratios:
(1) Current cash debt coverage.
(2) Cash debt coverage.


Shown below and on the next page are comparative balance sheets for Schmitt Company.


Additional information:
1. Net income for 2014 was $93,000.
2. Depreciation expense was $34,000.
3. Cash dividends of $39,000 were declared and paid.
4. Bonds payable amounting to $50,000 were redeemed for cash $50,000.
5. Common stock was issued for $42,000 cash.
6. No equipment was sold during 2014.
7. Land was sold for its book value.

Instructions:
(a) Prepare a statement of cash flows for 2014 using the indirect method.
(b) Compute these cash-based ratios:
(1) Current cash debt coverage.
(2) Cash debt coverage.

Additional information: 1. Net income for 2014 was $93,000. 2. Depreciation expense was $34,000. 3. Cash dividends of $39,000 were declared and paid. 4. Bonds payable amounting to $50,000 were redeemed for cash $50,000. 5. Common stock was issued for $42,000 cash. 6. No equipment was sold during 2014. 7. Land was sold for its book value. Instructions: (a) Prepare a statement of cash flows for 2014 using the indirect method. (b) Compute these cash-based ratios: (1) Current cash debt coverage. (2) Cash debt coverage.





Transcribed Image Text:

SCHMITT COMPANY Comparative Balance Sheets December 31 Assets 2014 2013 $ 68,000 $ 22,000 76,000 189,000 100,000 200,000 (32,000) Cash Accounts receivable 88,000 167,000 80,000 260,000 (66,000) Inventory Land Equipment Accumulated depreciation-equipment Total $597,000 $555,000 Liabilities and Stockholders' Equity 2014 2013 $ 39,000 150,000 216,000 192,000 $ 43,000 Accounts payable Bonds payable Common stock ($1 par) Retained earnings 200,000 174,000 138,000 Total $597,000 $555,000



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2.99

See Answer