| Exercise 5-18 (Part Level Submission) |
| The comparative balance sheets of Madrasah Corporation at the beginning and end of the year 2014 appear below. MADRASAH CORPORATION BALANCE SHEETS | | | Dec. 31, 2014 | | Jan. 1, 2014 | | Inc./Dec. | Assets | | | | | | | | | | Cash | | $21,596 | | | $14,381 | | | $7,215 | Inc. | Accounts receivable | | 107,596 | | | 89,381 | | | 18,215 | Inc. | Equipment | | 40,596 | | | 23,381 | | | 17,215 | Inc. | Less: Accumulated Depreciation-Equipment | | (17,000 | ) | | (11,000 | ) | | 6,000 | Inc. | Total | | $152,788 | | | $116,143 | | | | | Liabilities and Stockholders’ Equity | | | | | | | | | | Accounts payable | | $21,596 | | | $16,381 | | | 5,215 | Inc. | Common stock | | 101,596 | | | 81,381 | | | 20,215 | Inc. | Retained earnings | | 29,596 | | | 18,381 | | | 11,215 | Inc. | Total | | $152,788 | | | $116,143 | | | | |
Net income of $45,596 was reported, and dividends of $34,381 were paid in 2014. New equipment was purchased and none was sold. |
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| (a) | |
Prepare a statement of cash flows for the year 2014. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)Madrasah Corporation Statement of Cash Flows For the Year Ended December 31, 2014 | [removed] | | | [removed] | | $[removed] | Adjustment to reconcile net income to | | | [removed] | | | [removed] | $[removed] | | [removed] | [removed] | | [removed] | [removed] | | | | [removed] | [removed] | | [removed] | | | | [removed] | | | [removed] | | [removed] | | | | [removed] | | | [removed] | [removed] | | [removed] | [removed] | | [removed] | | [removed] | | | | [removed] | | $ [removed] | [removed] | | [removed] | [removed] | | $[removed] |
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| (b) | |
Compute the current ratio (current assets ÷ current liabilities) as of January 1, 2014, and December 31, 2014. (Round ratios to 1 decimal place., e.g. 4.5.) | | December 31, 2014 | | January 1, 2014 | Current ratio | | [removed] | | [removed] |
Compute free cash flow for the year 2014. Free Cash Flow | | $ [removed] |
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| (c) | |
In light of the analysis in (part b), comment on Madrasah’s liquidity and financial flexibility. Madrasah company has [removed] liquidity and [removed] financial flexibility. |
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