ACCT 002 Lecture Notes - Lecture 18: Money Market Fund, Net Income, Commercial Paper
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The Blackbeard Company Ltd provided the following information in regard to its operations for the year ended 30 June 2014:
| Cash Book Summary | |||
| Opening balance | $20,000 | Accounts Payable | $40,000 |
| Accounts receivable | 100,000 | Bills Payable (suppliers) | 20,000 |
| Bills Receivable (suppliers) | 20,000 | Interest paid | 60,000 |
| Debenture Issue | 400,000 | Operating expenses | 180,000 |
| Dividends received | 20,000 | Salaries & wages | 200,000 |
| Interest received | 40,000 | Current tax payable | 80,000 |
| Motor vehicles | 60,000 | Plant & machinery | 100,000 |
| Share capital | 200,000 | Dividend paid | 120,000 |
| Balance c/d | 60,000 | ||
| 860,000 | 860,000 | ||
| Balance b/d | 60,000 | ||
Required:
(a) Net cash used in operating activities; (b) Net cash used in investing activities; (c) Net cash from financing activities;
(d) Net increase/(decrease) in cash and cash equivalents.
Please use the following format
| Statement of Cash Flows for Blackbeard Company | ||
| For the Financial Year Ended 30 June 2014 | ||
| ( i ) Cash flows from Operating Activities | Inflows/ | Inflows/ |
| (Outflows) | (Outflows) | |
| Net cash used in operating activities | ||
| ( ii ) Cash flows from Investing Activities | ||
| Net cash used in Investing Activities | ||
| ( iii ) Cash flows from Financing Activities | ||
Problem 12-13A Prepare and Interpret a Statement of Cash Flows; Free Cash Flow [LO12-1, LO12-2, LO12-3]
| Mary Walker, president of Rusco Company, considers $38,000 to be the minimum cash balance for operating purposes. As can be seen from the following statements, only $33,000 in cash was available at the end of 2015. Since the company reported a large net income for the year, and also issued both bonds and common stock, the sharp decline in cash is puzzling to Ms. Walker. |
| Rusco Company Comparative Balance Sheet July 31, 2015 and 2014 | ||||
| 2015 | 2014 | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 33,000 | $ | 54,600 |
| Accounts Receivable | 221,600 | 233,400 | ||
| Inventory | 266,200 | 206,800 | ||
| Prepaid expenses | 19,600 | 36,600 | ||
| Total current assets | 540,400 | 531,400 | ||
| Long-term investments | 144,000 | 210,000 | ||
| Plant and equipment | 896,000 | 768,000 | ||
| Less accumulated depreciation | 219,000 | 195,400 | ||
| Net plant and equipment | 677,000 | 572,600 | ||
| Total assets | $ | 1,361,400 | $ | 1,314,000 |
| Liabilities and Stockholders' Equity | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 191,200 | $ | 249,800 |
| Accrued liabilities | 9,800 | 18,600 | ||
| Income taxes payable | 56,400 | 48,000 | ||
| Total current liabilities | 257,400 | 316,400 | ||
| Bonds Payable | 254,000 | 0 | ||
| Total liabilities | 511,400 | 316,400 | ||
| Stockholders’ equity: | ||||
| Common stock | 717,000 | 690,000 | ||
| Retained earnings | 133,000 | 307,600 | ||
| Total stockholders' equity | 850,000 | 997,600 | ||
| Total liabilities and stockholders' equity | $ | 1,361,400 | $ | 1,314,000 |
| Rusco Company Income Statement For the Year Ended July 31, 2015 | |||
| Sales | $ | 1,160,000 | |
| Cost of goods sold | 725,000 | ||
| Gross margin | 435,000 | ||
| Selling and administrative expenses | 310,300 | ||
| Net operating income | 124,700 | ||
| Nonoperating items: | |||
| Gain on sale of investments | $29,000 | ||
| Loss on sale of equipment | (9,600) | 19,400 | |
| Income before taxes | 144,100 | ||
| Income taxes | 43,140 | ||
| Net income | $ | 100,960 | |
| The following additional information is available for the year 2015. |
| a. | The company declared and paid a cash dividend. |
| b. | Equipment was sold during the year for $58,400. The equipment had originally cost $126,000 and had accumulated depreciation of $58,000. |
| c. | Long-term investments that had cost $66,000 were sold during the year for $95,000. |
| d. | The company did not retire any bonds payable or repurchase any of its common stock. |
| Required: | |
| 1. | Using the indirect method, compute the net cash provided by operating activities for 2015. (Negative amount should be indicated by a minus sign.) |
| 2. | Using the data from (1) above, and other data from the problem as needed, prepare a statement of cash flows for 2015. (List any deduction in cash and cash outflows as negative amounts.) |
| Rusco Company |
| Statement of Cash Flows - Indirect Method |
| For the year ended July 31,2015 |
|
| 3. | Compute free cash flow for 2015. (Negative amount should be indicated by a minus sign.) |
| Free cash flow |
