Question

WILDCAT Balance Sheet The chief accountant for WILDCAT Inc. provides you below with the company's 2009 Statement of Cash Flows (direct method) data and Income Statement. The accountant has asked for your help in preparing some missing figures in the company's comparative Balance Sheet. 2009 STATEMENT OF CASH FLOWS - Direct Method (all $ in millions) Cash Collected from Customers $71 Cash Paid to Suppliers (30) Cash Paid for S& A Costs (16) Cash Paid for Income Taxes (9) NET CASH FLOW FROM OPERATING $16 ACTIVITIES Cash received from sale of equipment $40 NET CASH FLOW FROM INVESTING $40 ACTIVITIES Cash received from issue of common stock $10 Cash paid in dividends to common (3) stockholders NET CASH FLOW FROM FINANCING S7 ACTIVITIES 2009 INCOME STATEMENT (all Sin Millions) Sales Revenue $80 Cost of Goods Sold (32) Bad Debt Expense (2) Depreciation Expense |(10) Selling & Administration Expenses (16) Gain on the sale of Equipment 15 Income Tax Expense (7) NET INCOME $28
Please show steps as well. Thank you!!

Answer 1

Solution:

$120 1) Computation Cash Balance as at 12/31/2008 Cash Balance as on 12/31/09 Less: Net cash flows Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Cash Balance as on 12/31/08 $16 $40 $7 $57 2) Computation of Inventory as at 12/31/2008 Inventory as at 12/31/09 Cost of goods sold Less: Purchases (see note) Inventory as at 12/31/08 $60 $32 $40 $52 3) Computation of Accumulated Depreciation as at 12/31/2008 Accumulated Depreciation as at 12/31/09 $40 Less: Depreciation Expense for 2009 $10 Accumulated Depreciation as at 12/31/08 $30 4) Computation of Income Taxes Payable as at 12/31/2008 Income Taxes Payable as at 12/31/09 $22 Add: Cash paid for income taxes $9 Less: Income Tax Expense for 2009 $7 Income Taxes Payable as at 12/31/08 $24

5) Computation of Retained Earnings as at 12/31/2009 Retained Earnings as at 12/31/08 Add: Net Income Less: Dividends paid Retained Earnings as at 12/31/09 $45 $28 $3 $70 6) Calculation of Accounts Receivable as at 12/31/2009 Accounts Receivable as at 12/31/08 Add: Sales for 2009 (assumes all credit) Less: Cash collected from customers Less: Bad Debts Write off (see note) Accounts Receivable as at 12/31/09 $90 $80 $71 $4 $95

Working Note: Computation of Bad Dabts write off during 2009 Allowance for Doubtful accounts as at 12/31/08 Add: Bad Debt Expense Less: Allow for Doubtful accounts as at 12/31/09 Bad Debt write off $6 $2 $4 $4 Computation of Purchases for 2009 Accounts payable to suppliers as at 12/31/09 Add: Cash paid to suppliers Less: Accounts payable to suppliers as at 12/31/08 Purchases for 2009 (assumes all credit) $40 $30 $30 $40