Question

In: Accounting

Horse Heaven Farm began 20X6 with cash of 180,000. During the year, Horse Heaven earned service...

Horse Heaven Farm began 20X6 with cash of 180,000. During the year, Horse Heaven earned service revenue of 600,000 and collected 480,000 from customers. Expenses for the year totaled 330,000, with 300,000 paid in cash to suppliers and employees. Horse heaven also paid 138,000 to purchase equipment and a cash dividend of 47,000 to shareholders. During 20X6, Horse Heaven borrowed 25,000 by issuing a note payable. Prepare the company's statement of cash flows for the year. Format operating activities by the direct method. Calculate Horse's free cash flow and cash realization ratio.

Solutions

Expert Solution

Horse Heaven Farm
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash Flows from Operating Activities
Cash receipts from customers 480000
Cash paid to suppliers and employees -300000
Net cash provided by operating activities 180000
Cash Flows from Investing Activities
Purchase of equipment -138000
Net cash used by investing activities -138000
Cash Flows from Financing Activities
Borrowing against note payable 25000
Payment of cash dividends -47000
Net cash used by financing activities -22000
Net increase in cash 20000
Cash balance at the beginning of 20X6 180000
Cash balance at the end of 20X6 200000

Free cash flow = Cash flow from operations - Capital expenditures - Dividends = $180000 - $138000 = $42000

Cash realization ratio = Cash flow from operations/Net income = $180000/$270000 = 0.67

Net income = $600000 - $330000 = $270000


Related Solutions

On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side...
On January 1, 20X6, Plus Corporation acquired 90 percent of Side Corporation for $180,000 cash. Side reported net income of $30,000 and dividends of $10,000 for 20X6, 20X7, and 20X8. On January 1, 20X6, Side reported common stock outstanding of $100,000 and retained earnings of $60,000, and the fair value of the noncontrolling interest was $20,000. It held land with a book value of $30,000 and a market value of $35,000 and equipment with a book value of $50,000 and...
A company began operations at the start of 2015. During the year, it made cash sales...
A company began operations at the start of 2015. During the year, it made cash sales of $150,000 and credit sales totaling $500,000. $420,000 in cash from these credit sales was collected during the year. The company purchased land for $60,000 for a new location. Expenses totaled $339,000, of which $300,000 was paid in cash. Dividends of $10,000 were paid to stockholders.   What was net income for 2015? A. $311,000 B. $270,000 C. $301,000 D. $350,000 E. None of the...
Campbell Manufacturing Company began operations in 20X6. Depreciation for the year amounted to $200,000; 30% relates...
Campbell Manufacturing Company began operations in 20X6. Depreciation for the year amounted to $200,000; 30% relates to sales, 20% relates to administrative facilities, and 50% to the factory. Of the total units produced during the year, 75% were sold in 20X6 and 25% in 20X7. Of the total depreciation of $200,000, how much will be included on the 20X6 income statement?
The General Fund of a small municipality began the current fiscal year with $200,000 cash. During...
The General Fund of a small municipality began the current fiscal year with $200,000 cash. During the fiscal year, the General Fund made cash disbursements for the following: - Salaries and other personnel costs, $90,000 - Office rent and utilities, $12,000 - Retirement of debt principal, $20,000; payment of interest, $2,000 - Purchased equipment at the beginning of the fiscal year for $60,000; the equipment is expected to last 5 years and have a salvage value of $6,000 - Photocopier...
During their first year of operations, the partnership earned $140,000.
E12-16 Allocating profits and losses to the partners Polacco and Walsh have formed a partnership. During their first year of operations, the partnership earned $140,000. Their profit-and-loss-sharing agreement states that, first, each partner will receive 10% of their capital balances. The second level is based on services, with $25,000 to Polacco and $15,000 to Walsh. The remainder then will be shared 4:1 between Polacco and Walsh, respectively. Requirements 1. Calculate the amount of income each partner will receive under their profit-and- loss-sharing agreement...
Dr. Jim Witcher was a 57-year-old retired veterinarian who owned a horse farm in Louisiana. He...
Dr. Jim Witcher was a 57-year-old retired veterinarian who owned a horse farm in Louisiana. He had amyotrophic lateral sclerosis (ALS, sometimes called Lou Gehrig's disease), which was gradually causing him to lose muscle control. He had been active on his farm and enjoyed caring for his horses but was now wheelchair-bound in a power-assisted chair. He could, with assistance, get out on his farm but was losing the ability to feed himself. He worried about his gradual decline and...
At the beginning of the year, Miranda began a calendar-year business and placed in service the...
At the beginning of the year, Miranda began a calendar-year business and placed in service the following assets during the year: Date Cost Asset Placed in Service Basis Computers 1/30 $ 50,500 Office desks 2/15 $ 54,500 Machinery 7/25 $ 97,500 Office building 8/13 $ 430,000 Assuming Miranda elects out of bonus depreciation and does not elect §179 expensing , answer the following questions: (Use MACRS Table 1, Table 2, Table 3, Table 4 and Table 5.) (Do not round...
Sadler Corporation produces lawnmowers. The lawnmowers come with a three-year warranty. During 20X6, Sadler sold 20,000...
Sadler Corporation produces lawnmowers. The lawnmowers come with a three-year warranty. During 20X6, Sadler sold 20,000 lawnmowers that cost $5,800,000 to manufacture for $10,000,000 cash. Sadler’s accountant estimates that 10 percent will need to be repaired at some point over the next three years at an average cost of $37 per lawnmower. a.Make the journal entry to record the sale of the lawnmowers in 20X6. b.Record warranty expense for 20X6. c.During 20X7, Sadler spends $24,000 to repair the lawnmowers. Record...
An employee earned $37,000 during the year working for an employer when the maximum limit for...
An employee earned $37,000 during the year working for an employer when the maximum limit for Social Security was $118,500. The FICA tax rate for Social Security is 6.2% and the FICA tax rate for Medicare is 1.45%. The employee’s annual FICA taxes amount is
Normally, capital gains earned in the mutual fund during the year are paid out to the...
Normally, capital gains earned in the mutual fund during the year are paid out to the investor as capital gains, at the end of the year. REQUIRED: What happens in a year in which the mutual fund suffers net capital losses. What happens, if anything, to the Net Asset Value of a mutual fund after it pays out to investors all of the income it earned during the year. What information in the Fund Facts document helps investors compare management...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT