Question

Statement of Cash Flows (Direct Method)
The Wolff Company's income statement and comparative balance sheets at December 31 of 2013 and 2012 are shown below:

WOLFF COMPANY Income Statement For the Year Ended December 31, 2013
Sales Revenue		$825,500
Cost of Goods Sold	$559,000
Wages Expense	111,800
Insurance Expense	10,400
Depreciation Expense	22,100
Interest Expense	11,700
Income Tax Expense	37,700	752,700
Net Income		$72,800

WOLFF COMPANY Balance Sheets
	Dec. 31, 2013	Dec. 31, 2012
Assets
Cash	$14,300	$6,500
Accounts Receivable	53,300	41,600
Inventory	117,000	78,000
Prepaid Insurance	6,500	9,100
Plant Assets	325,000	253,500
Accumulated Depreciation	(88,400)	(66,300)
Total Assets	$427,700	$322,400
Liabilities and Stockholders' Equity
Accounts Payable	$9,100	$13,000
Wages Payable	11,700	7,800
Income Tax Payable	9,100	10,400
Bonds Payable	169,000	97,500
Common Stock	117,000	117,000
Retained Earnings	111,800	76,700
Total Liabilities and Stockholders' Equity	$427,700	$322,400

Cash dividends of $37,700 were declared and paid during 2013. Plant assets were purchased for cash and bonds payable were issued for cash. Bond interest is paid semi-annually on June 30 and December 31. Accounts payable relate to merchandise purchases.

Required
a. Calculate the change in cash that occurred during 2013.
b. Prepare a statement of cash flows using the indirect method.
c. Compute free cash flow.
d. Compute the operating-cash-flow-to-current-liabilities ratio.
e. Compute the operating-cash-flow-to-capital-expenditures ratio.

a. Change in Cash during 2013 $Answer AnswerIncreaseDecrease

b. Use a negative sign with cash outflow answers.

WOLFF COMPANY Statement of Cash Flows For Year Ended December 31, 2013
Cash Flow from Operating Activities
Cash Received from Customers		Answer
Cash paid for Merchandise Purchased	Answer
Cash Paid to Employees	Answer
Cash Paid as Insurance	Answer
Cash Paid for Interest	Answer
Cash Paid as Income Taxes	Answer	Answer
Cash Provided by Operating Activities		Answer
Cash Flow from Investing Activities
Purchase of Plant Assets		Answer
Cash Flow from Financing Activities
Issuance of Bonds Payable	Answer
Payment of Dividends	Answer
Cash Provided by Financing Activities		Answer
Net Change in Cash		Answer
Cash at Beginning of Year		Answer
Cash at End of Year		Answer

c. Free cash flow $Answer

d. Operating-cash-flow-to-current-liabilities ratio.
Round answer to two decimal places.
Answer

e. Operating-cash-flow-to-capital-expenditures ratio.
Round answer to two decimal places.
Answer

Answer 1

a. Calculate the change in cash that occurred during 2013.
b. Prepare a statement of cash flows using the indirect method.