Assessment 2: Balance Sheet, Income Statement, and Cash Flow

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cf_assessment_2_part_3_template.xls
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Instructions

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Falcon Company

Preparation and Analysis of Statement of Cash Flows
(Preparation and Analysis of Statement of Cash Flows) Here are the financial statements of Falcon Company.
Falcon Company
Comparative Balance Sheets
December 31, 2018
Assets 2018 2017
Cash $14,300 $18,150
Accounts receivable 15,400 7,700
Merchandise inventory 20,900 13,750
Property, plant, and equipment $38,500 $42,900
Less: Accumulated depreciation (14,850) 23,650 (13,200) 29,700
Total $74,250 $69,300
Liabilities and Stockholders’ Equity
Accounts payable $17,050 $23,650
Income taxes payable 14,300 11,000
Bonds payable 11,000 5,500
Common stock 13,750 13,750
Retained earnings 18,150 15,400
Total $74,250 $69,300
Falcon Company
Income Statement
For the Year Ended December 31, 2016
Sales $157,300
Cost of goods sold 106,700
Gross profit 50,600
Selling expenses $15,400
Administrative expenses 4,950 20,350
Income from operations 30,250
Interest expense 3,850
Income before income taxes 26,400
Income tax expense 3,850
Net income $22,550
Additional data:
1. Dividends of $19,800 were declared and paid.
2. During the year equipment was sold for $5,500 cash. This equipment cost $8,250
originally and had a book value of $5,500 at the time of sale.
3. All depreciation expense, $4,400 , is in the selling expense category.
4. All sales and purchases are on account.
5. Additional equipment was purchased for $3,850 cash.
Instructions:
(a) Prepare a statement of cash flows using the indirect method.
Falcon Company
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from operating activities
Adjustments to reconcile NI to net cash provided by operating activities
Cash flows from investing activities
Cash flows from financing activities
(b)(1) Compute the current cash debt coverage ratio.
Current cash debt coverage ratio =
Current cash debt coverage ratio =
Current cash debt coverage ratio =
(b)(2) Compute the cash debt coverage ratio.
Cash debt coverage ratio
Cash debt coverage ratio
Cash debt coverage ratio
(b)(3) Compute the free cash flow.
Free cash flow = - -
Free cash flow = - -
Free cash flow =
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