Question

Problem 5-7

Bramble Inc. had the following balance sheet at December 31, 2019.

BRAMBLE INC. BALANCE SHEET DECEMBER 31, 2019
Cash		$ 25,810		Accounts payable		$ 35,810
Accounts receivable		27,010		Bonds payable		46,810
Investments		32,000		Common stock		105,810
Plant assets (net)		86,810		Retained earnings		29,010
Land		45,810				$217,440
		$217,440

During 2020, the following occurred.

1.		Bramble liquidated its available-for-sale debt investment portfolio at a loss of $10,810.
2.		A tract of land was purchased for $43,810.
3.		An additional $30,000 in common stock was issued at par.
4.		Dividends totaling $15,810 were declared and paid to stockholders.
5.		Net income for 2020 was $40,810, including $17,810 in depreciation expense.
6.		Land was purchased through the issuance of $35,810 in additional bonds.
7.		At December 31, 2020, Cash was $76,010, Accounts Receivable was $47,810, and Accounts Payable was $45,810.

Prepare a statement of cash flows for the year 2020 for Bramble. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Prepare the unclassified balance sheet as it would appear at December 31, 2020. (List Assets in order of liquidity.)

Compute Bramble’s free cash flow and current cash debt coverage for 2020. (Round current cash debt coverage to 2 decimal places, e.g. 0.56. Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Bramble Inc.
Cash flow statement
For the period ended Dec. 31, 2020 (amount in $)
cash flow from operating activities:
adjustments to reconcile net income
net income	40810
depreciation	17810
loss on sale of investment	10810
increase in accounts receivable	-20800
increase in accounts payable	10000
net cash flow from operating activities		58630
cash flow from investing activities:
purchase of land	-43810
sale of investments	21190
net cash flow from investing activities		-22620
cash flow from financing activities:
issuance of stock	30000
dividends paid	-15810
net cash flow from financing activities		14190
net change in cash flow		50200
cash balance at the beginning		25810
cash balance at the end		76010

Bramble Inc.
Balance Sheet
As of Dec.31, 2020
assets	amount ($)	liabilities	amount ($)
cash	76010	accounts payable	45810
accounts receivable	47810	bonds payable	82620
plant assets	69000	common stock	135810
land	125430	retained earnings	54010
total assets	318250	total liabilities and stockholders equity	318250