Learning Materials
Features
Discover
Chapter 5: 1 (page 237)
How does information from the balance sheet help users of the financial statements?
Financial capacity and financial flexibility can be determined using the company鈥檚 balance sheet.
Over 30 million students worldwide already upgrade their learning with 91影视!
All the tools & learning materials you need for study success - in one app.
Get started for free
EXCEL (Current Assets Section of the Balance Sheet) Presented below are selected accounts of Yasunari Kawabata Company at December 31, 2017.
Inventory | \(52,000 | Cost of goods sold | 2,100,000 | |
Unearned service revenue | 90,000 | Note receivable | 40,000 | |
Equipment | 253,000 | Account receivable | 161,000 | |
Inventory (Work-in-process) | 34,000 | Inventory (raw material) | 207,000 | |
Cash | 37,000 | Supplies Expenses | 60,000 | |
Debt investment (Short-term) | 31,000 | Allowance for doubtful accounts | 12,000 | |
Customer advances | 36,000 | License | 18,000 | |
Restricted cash for plant expansion | 50,000 | Additional paid-in-capital | 88,000 | |
Treasury stock | 22,000 |
The following additional information is available.
1. Inventories are valued at lower-of-cost or market using LIFO.
2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is \)50,600.
3. The short-term investments have a fair value of \(29,000. (Assume they are trading securities.)
4. The notes receivable are due April 30, 2019, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrue interest due on December 31, 2017.)
5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of \)50,000 are pledged as collateral on a bank loan.
6. Licenses are recorded net of accumulated amortisation of $14,000.
7. Treasury stock is recorded at cost.
Instructions
Prepare the current assets section of Yasunari Kawabata Company鈥檚 December 31, 2017, balance sheet, with appropriate disclosures.
Aero Inc. had the following balance sheet at December 31, 2016.
LANSBURY INC. | |||
BALANCE SHEET | |||
DECEMBER 31, 2016 | |||
Cash | \(20,000 | Account payable | \)30,000 |
Accounts receivables | 21,200 | Bond payable | 41,000 |
Investment | 32,000 | Common stock | 100,000 |
Plant assets (net) | 81,000 | Retained earnings | 23,200 |
Land | 40,000 | ||
\(194,200 | \)194,200 |
During 2017, the following occurred.
1. Aero liquidated its available-for-sale debt investment portfolio at a loss of \(5,000.
2. A tract of land was purchased for \)38,000.
3. An additional \(30,000 in common stock was issued at par.
4. Dividends totaling \)10,000 were declared and paid to stockholders.
5. Net income for 2017 was \(35,000, including \)12,000 in depreciation expense.
6. Land was purchased through the issuance of \(30,000 in additional bonds.
7. At December 31, 2017, Cash was \)70,200, Accounts Receivable was \(42,000, and Accounts Payable was \)40,000.
Instructions
(a) Prepare a statement of cash flows for the year 2017 for Aero.
(b) Prepare the unclassified balance sheet as it would appear at December 31, 2017.
(c) Compute Aero鈥檚 free cash flow and current cash debt coverage for 2017.
(d) Use the analysis of Aero to illustrate how information in the balance sheet and statement of cash flows helps the user of the financial statements.
In its December 31, 2017, balance sheet Oakley Corporation reported as an asset, 鈥淣et notes and accounts receivable, $7,100,000.鈥� What other disclosures are necessary?
Martinez Corporation engaged in the following cash transactions during 2017.
Sale of land and building $191,000
Purchase of treasury stock 40,000
Purchase of land 37,000
Payment of cash dividend 95,000
Purchase of equipment 53,000
Issuance of common stock 147,000
Retirement of bonds 100,000
Compute the net cash provided (used) by investing activities.
What is working capital? How does working capital relate to the operating cycle?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
Explanations 
Textbooks 
Flashcards 
91影视 AI 
Notes 
Study Plans 
Study Sets 
Find a degree 
Magazine