J. Walter Smith, the Chief Executive Officer of TheKennedy Corporation, is concerned about the proper presentation ofthe companyâs Cash Flow Statement and has requested yourprofessional assistance in regard to this matter. In thepast, the company simply listed the beginning andending cash balances on a comparative Balance Sheet and provided nodetails whatsoever with regard to the changes in cash.The reader was not provided with any details with regard tothe current yearâs transactions.
Required:
Please write a Business Letter to Mr. J. Walter Smithadvising him on the presentation of the following transactionscontained in the Statement of Cash Flows. In your letter, pleaseexplain and discuss how and where each of the following sixtransactions should be shown on the Statement of Cash Flows. Youmust write a minimum of two full pages. Use 12point font with a 1â margin all around.
1) To help Mr. Smith understand the importance of theCash Flow Statement, please explain the importanceof the cash flow statement to the reader. In yourdiscussion, what specific items are presented inthe Statement of Cash Flows and what specific information isconveyed to the reader of the statement? Pleasepresent a detailed discussion.
2) In February of 2015, The Kennedy Corporation soldequipment with a Book Value of $72,500 and an original cost of$158,000 was sold at a loss of $22,000. As a result of thistransaction, the company took a book loss on its Income Statement. Please explain to Mr. Smith how and where thistransaction should be shown on the Statement of Cash Flows? Pleaseprovide a detailed discussion.
3) In analyzing the current assets and currentliabilities on the comparative
Balance Sheet, Merchandise Inventory and PrepaidInsurance increased by $75,000 and $15,000 respectively andAccounts Payable increased by $10,000 and Unearned Sales Revenuedecreased by $9,000. How and where should these itemsbe shown on the Statement of Cash Flows? Please provide a detaileddiscussion.
4) On June 05, 2015, Kennedy Corporation acquired alarge tract of land in exchange for 15,000 shares of $1.00 parvalue Kennedy Corporation common stock. The fair market value (FMV)of the Land is $25,000. How and where should thistransaction be shown on the Statement of Cash Flows? Please providea detailed discussion.
5) On July 07, 2015, Kennedy Corporation redeemed$500,000 of its 6% Debenture Bonds at 105. Kennedy Corporation alsopaid a dividend of $200,000 to its common shareholders. How andwhere should these transactions be shown on the Statement of CashFlows? Please provide a detailed discussion.
6) At December 31, 2015, The Kennedy Corporationreported $2,500,000 of net income for the calendar year. It alsoreported the following transactions: Included in the net income wasa book gain on the sale of property for $250,000; it also tookdepreciation deductions of $300,000 on depreciable assets includedin property plant & equipment. Please provide a detaileddiscussion.
J. Walter Smith, the Chief Executive Officer of TheKennedy Corporation, is concerned about the proper presentation ofthe companyâs Cash Flow Statement and has requested yourprofessional assistance in regard to this matter. In thepast, the company simply listed the beginning andending cash balances on a comparative Balance Sheet and provided nodetails whatsoever with regard to the changes in cash.The reader was not provided with any details with regard tothe current yearâs transactions.
Required:
Please write a Business Letter to Mr. J. Walter Smithadvising him on the presentation of the following transactionscontained in the Statement of Cash Flows. In your letter, pleaseexplain and discuss how and where each of the following sixtransactions should be shown on the Statement of Cash Flows. Youmust write a minimum of two full pages. Use 12point font with a 1â margin all around.
1) To help Mr. Smith understand the importance of theCash Flow Statement, please explain the importanceof the cash flow statement to the reader. In yourdiscussion, what specific items are presented inthe Statement of Cash Flows and what specific information isconveyed to the reader of the statement? Pleasepresent a detailed discussion.
2) In February of 2015, The Kennedy Corporation soldequipment with a Book Value of $72,500 and an original cost of$158,000 was sold at a loss of $22,000. As a result of thistransaction, the company took a book loss on its Income Statement. Please explain to Mr. Smith how and where thistransaction should be shown on the Statement of Cash Flows? Pleaseprovide a detailed discussion.
3) In analyzing the current assets and currentliabilities on the comparative
Balance Sheet, Merchandise Inventory and PrepaidInsurance increased by $75,000 and $15,000 respectively andAccounts Payable increased by $10,000 and Unearned Sales Revenuedecreased by $9,000. How and where should these itemsbe shown on the Statement of Cash Flows? Please provide a detaileddiscussion.
4) On June 05, 2015, Kennedy Corporation acquired alarge tract of land in exchange for 15,000 shares of $1.00 parvalue Kennedy Corporation common stock. The fair market value (FMV)of the Land is $25,000. How and where should thistransaction be shown on the Statement of Cash Flows? Please providea detailed discussion.
5) On July 07, 2015, Kennedy Corporation redeemed$500,000 of its 6% Debenture Bonds at 105. Kennedy Corporation alsopaid a dividend of $200,000 to its common shareholders. How andwhere should these transactions be shown on the Statement of CashFlows? Please provide a detailed discussion.
6) At December 31, 2015, The Kennedy Corporationreported $2,500,000 of net income for the calendar year. It alsoreported the following transactions: Included in the net income wasa book gain on the sale of property for $250,000; it also tookdepreciation deductions of $300,000 on depreciable assets includedin property plant & equipment. Please provide a detaileddiscussion.
