Question

In: Accounting

Terry Company’s 1994 income statement and comparative balance sheets at December 31, 1994 and 1993, are...

Terry Company’s 1994 income statement and comparative balance sheets at December 31, 1994 and 1993, are as follows (SHOW YOUR WORK WITH THE ACCOUNTING TITLES):

Terry Company

Income Statement

For the Year Ended December 31, 1994

Sales $876,000

Dividend Income 5,000

$881,000

Cost of Goods Sold $486,000

Wages Expense 92,000

Advertising Expense 10,000

Depreciation Expense 22,000

Income Tax Expense 27,000

Loss on Sale of Investments 2,000 639,000

$242,000

Terry Company

Balance Sheet

Assets Dec. 31, 1994 Dec. 31, 1993

Cash $ 92,000 $ 22,000

Accounts Receivable 42,000 38,000

Inventory 107,000 141,000

Prepaid Advertising 17,000 19,000

Long-term Investments 30,000 41,000

Plant Assets 378,000 330,000

Accumulated Depreciation (183,000) (161,000)

Total Assets $483,000 $430,000

Liabilities and Stockholder’s Equity

Accounts Payable $ 27,000 $ 54,000

Wages Payable 6,000 12,500

Income Tax Payable 3,000 8,500

Common Stock 345,000 325,000

Retained Earnings 102,000 30,000

Total Liabilities and Stockholder’s Equity $483,000 $430,000

Cash dividends of $170,000 were declared and paid during 1994. Plant assets were purchased for cash, and later in the year, additional common stock was issued for cash. Investments costing $11,000 were sold for cash at a $2,000 loss.

Terry’s cash flow from FINANCING Activities in 1994 was (3 points):

Terry’s Cash flow from INVESTING Activities in 1994 was (3 points):

Terry’s cash flow from OPERATIONS in 1994 was (6 points):

Cash Collected From Customers (3 points):

Determine the amount of free cash flows (3 points):

Expert Solution

Answer A.

Answer B.

Proceed from sale of investments = Cost of investments sold - Loss on sale of investment
Proceed from sale of investments = $11,000 - $2,000
Proceed from sale of investments = $9,000

Answer C.

Answer D.

Cash collected from customers = Beginning accounts receivable + Sales - Ending accounts receivable
Cash collected from customers = $38,000 + $876,000 - $42,000
Cash collected from customers = $872,000

Answer E.

Free cash flows = Net cash provided by operating activities - Net capital spending - Dividends
Free cash flows = $259,000 - $48,000 - $20,000
Free cash flows = $191,000

ekkarill92 answered 1 year ago

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