Assignment 6: Financial Acct 2

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CP12-2

Finding Financial Information

LO12-2, 12-4, 12-6

Refer to the financial statements of Urban Outfitters given in Appendix C at the end of this book.

Required:

1. Does Urban Outfitters use the direct or indirect method to report cash flows from operating activities?

2. What amount of tax payments did the company make during the most recent reporting year? (Hint: The statement of cash flows may be helpful to answer this question.)

3. Explain why the “share-based compensation” and “depreciation and amortization” items were added in the reconciliation of net income to net cash provided by operating activities.

4. Has the company paid cash dividends during the last three years? How do you know?

5. What was free cash flow for the year ended January 31, 2012?

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P12-5

(Supplement B) Preparing a Statement of Cash Flows with Gain on Sale of Equipment (Indirect Method)

LO12-2, 12-4, 12-6

XS Supply Company is developing its annual financial statements at December 31, 2014. The statements are complete except for the statement of cash flows. The completed comparative balance sheets and income statement are summarized:

Additional Data:

a. Bought equipment for cash, $31,000.

Sold equipment with original cost of $10,000, accumulated depreciation of $7,000, for $4,000 cash.

b. Paid $6,000 on the long-term note payable. c. Issued new shares of stock for $16,000 cash. d. No dividends were declared or paid. e. Other expenses included depreciation, $12,000; wages, $13,000; taxes,

$6,000; and other, $7,800. f. Accounts payable includes only inventory purchases made on credit. Because

there are no liability accounts relating to taxes or other expenses, assume that these expenses were fully paid in cash.

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Required:

1. Prepare the statement of cash flows for the year ended December 31, 2014, using the indirect method.

2. Evaluate the statement of cash flows.