Inventory 45,000 Prepaid insurance 1,000 Land 21,000 Building 80,000 Accounts payable 55,000 Salaries payable 2,000 Capital stock 100,000 Retained earnings 25,000 Determine Coglin’s current ratio and working capital. Beyond the information provided in your answers to what does the composition of Coglin’s current “A,” assets tell you about its liquidity. What information would one need to fully access Coglin’s liquidity? A) Current 1.44 to 1 ANSWER: ($23,000 Cash + $13,000 Accounts receivable + $45,000 Inventory + $1,000 Prepaid insurance) / ($55,000 Accounts payable + $2,000 Salaries payable) = 1.44 to 1 Working capital: $25,000 ($82,000 Total Current Assets $57,000 Total Current Liabilities = $25,000) – The closer an is to being converted to cash, the more liquid the asset is. Some assets, like inventory, take much longer to turn into cash because they must be sold before collection of the cash can be made. Prepaid insurance is not as liquid as accounts receivable since it will be consumed as time passes. Receivables are more liquid than inventory because a sale has already occurred The statement of cash flows would be helpful to determine the cash inflows and outflows that occurred during the year. The balance sheet represents only the ending balance of the cash account. The statement of cash flows also identifies the sources and uses of cash by business activity and the nature of each particular cash flow During 2014, Wimbrow Images reported $60,000 of net income and generated $80,000 of cash from operations. During the year, Wimbrow Images paid $15,000 to purchase a new delivery truck and also paid dividends in the amount of $30,000. Wimbrow Images borrowed $40,000 cash from the bank. At the beginning of the year, cash amounted to $50,000. Prepare a statement of cash flows for the year ended December 31, 2014. How much more cash does Wimbrow Images have available at the end of the year than at the beginning? Why is there a difference between net income and cash flows from operations? A) ANSWER: Wimbrow Images Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities $ 80,000
Inventory 45,000 Prepaid insurance 1,000 Land 21,000 Building 80,000 Accounts payable 55,000 Salaries payable 2,000 Capital stock 100,000 Retained earnings 25,000 Determine Coglin’s current ratio and working capital. Beyond the information provided in your answers to “A,” what does the composition of Coglin’s current assets tell you about its liquidity. What information would one need to fully access Coglin’s liquidity? ANSWER: A) Current 1.44 to 1 ($23,000 Cash + $13,000 Accounts receivable + $45,000 Inventory + $1,000 Prepaid insurance) / ($55,000 Accounts payable + $2,000 Salaries payable) = 1.44 to 1 Working capital: $25,000 ($82,000 Total Current Assets – $57,000 Total Current Liabilities = $25,000) The closer an is to being converted to cash, the more liquid the asset is. Some assets, like inventory, take much longer to turn into cash because they must be sold before collection of the cash can be made. Prepaid insurance is not as liquid as accounts receivable since it will be consumed as time passes. Receivables are more liquid than inventory because a sale has already occurred The statement of cash flows would be helpful to determine the cash inflows and outflows that occurred during the year. The balance sheet represents only the ending balance of the cash account. The statement of cash flows also identifies the sources and uses of cash by business activity and the nature of each particular cash flow During 2014, Wimbrow Images reported $60,000 of net income and generated $80,000 of cash from operations. During the year, Wimbrow Images paid $15,000 to purchase a new delivery truck and also paid dividends in the amount of $30,000. Wimbrow Images borrowed $40,000 cash from the bank. At the beginning of the year, cash amounted to $50,000. Prepare a statement of cash flows for the year ended December 31, 2014. How much more cash does Wimbrow Images have available at the end of the year than at the beginning? Why is there a difference between net income and cash flows from operations? ANSWER: A) Wimbrow Images Statement of Cash Flows For the Year Ended December 31, 2014 Cash flows from operating activities $ 80,000
Downloadable-Test-Bank-for-Financial-Accounting-The-Impact-on-Decision-Makers-9th-Edition-Porter-1.docx