Forten Company, a merchandiser, recently completed its calendar-year 2017 operations. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, and (5) Other Expenses are paid in advance and are initially debited to Prepaid Expenses. The company’s income statement and balance sheets follow.

Problem 12-3A Indirect: Statement of cash flows LO A1, P1, P2, P3

Additional Information on Year 2017 Transactions

1. The loss on the cash sale of equipment was $13,125 (details in b).
2. Sold equipment costing $70,875, with accumulated depreciation of $38,125, for $19,625 cash.
3. Purchased equipment costing $104,375 by paying $46,000 cash and signing a long-term note payable for the balance.
4. Borrowed $4,800 cash by signing a short-term note payable.
5. Paid $54,125 cash to reduce the long-term notes payable.
6. Issued 3,300 shares of common stock for $20 cash per share.
7. Declared and paid cash dividends of $51,700.

Required:
1. Prepare a complete statement of cash flows; report its operating activities using the indirect method. (Amounts to be deducted should be indicated with a minus sign.)

Golden Corp.'s current year income statement, comparative balance sheets, and additional information follow. For the year, (1) all sales are credit sales, (2) all credits to Accounts Receivable reflect cash receipts from customers, (3) all purchases of inventory are on credit, (4) all debits to Accounts Payable reflect cash payments for inventory, (5) Other Expenses are all cash expenses, and (6) any change in Income Taxes Payable reflects the accrual and cash payment of taxes. GOLDEN CORPORATION Comparative Balance Sheets December 31 Current Year Prior Year Assets Cash $ 172,000 $ 115,800 Accounts receivable 95,000 79,000 Inventory 613,000 534,000 Total current assets 880,000 728,800 Equipment 356,500 307,000 Accum. depreciation—Equipment (162,000 ) (108,000 ) Total assets $ 1,074,500 $ 927,800 Liabilities and Equity Accounts payable $ 103,000 $ 79,000 Income taxes payable 36,000 29,100 Total current liabilities 139,000 108,100 Equity Common stock, $2 par value 601,600 576,000 Paid-in capital in excess of par value, common stock 210,400 172,000 Retained earnings 123,500 71,700 Total liabilities and equity $ 1,074,500 $ 927,800 GOLDEN CORPORATION Income Statement For Current Year Ended December 31 Sales $ 1,832,000 Cost of goods sold 1,094,000 Gross profit 738,000 Operating expenses Depreciation expense $ 54,000 Other expenses 502,000 556,000 Income before taxes 182,000 Income taxes expense 33,200 Net income $ 148,800 Additional Information on Current Year Transactions Purchased equipment for $49,500 cash. Issued 12,800 shares of common stock for $5 cash per share. Declared and paid $97,000 in cash dividends. Required: Prepare a complete statement of cash flows using the indirect method for the current year. (Amounts to be deducted should be indicated with a minus sign.)

Additional Information on Current Year Transactions

1. Purchased equipment for $49,500 cash.
2. Issued 12,800 shares of common stock for $5 cash per share.
3. Declared and paid $97,000 in cash dividends.

Required:
Prepare a complete statement of cash flows using a spreadsheet under the indirect method. (Enter all amounts as positive values.)

Consider the following stock price and shares outstanding information. DECEMBER 31, Year 1 DECEMBER 31, Year 2 Price Shares Outstanding Price Shares Outstanding Stock K $22 100,000,000 $30 100,000,000 Stock M 84 2,400,000 46 4,800,000a Stock R 39 24,000,000 42 24,000,000 aStock split two-for-one during the year. Compute the beginning and ending values for a price-weighted index and a market-value-weighted index. Assume a base value of 100 and Year 1 as the base period. Do not round intermediate calculations. Round your answers to two decimal places.

PWIYear 1: PWIYear 2: VWIYear 1: VWIYear 2:

Compute the percentage change in the value of each index during the year. Do not round intermediate calculations. Round your answers to two decimal places. Percentage change in PWI: % Percentage change in VWI: %

Compute the percentage change for an unweighted index assuming $1,000 is invested in each stock. Do not round intermediate calculations. Round your answer to two decimal places. %

A rich aunt has promised you $2,810.00, one year from today. In addition, each year after that , she has promised a payment (on the anniversary of the last payment) that is 4.00% larger than the last payment. She will continue to show this generosity for 25 years, giving a total of 25 payments. If the interest rate is 10.00%, what is her promise worth today?

Last year Carson Industries issued a 10-year, 15% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,075 and it sells for $1,180. What is the bond's nominal yield to maturity? What is the bond's nominal yield to call? Would an investor be more likely to earn the YTM or the YTC? What is the current yield? Is this yield affected by whether the bond is likely to be called? What is the expected capital gains (or loss) yield for the coming year? Use amounts calculated in above requirements for calcuation, if reqired. Round your answer to two decimal places. Enter a loss percentage, if any, with a minus sign. Is this yield dependent on whether the bond is expected to be called?

Suppose for $1,000 you could buy a 10%, 10-year, annual payment bond or a 10%, 10-year, semiannual payment bond. They are equally risky. Which would you prefer? If $1,000 is the proper price for the semiannual bond, what is the equilibrium price for the annual payment bond?

Consolidated Statement of Income

(in thousands)

The Group, Inc. did not sell any equipment or repay any borrowings during the year ended December 31, Year 2. The company declared and paid dividends in the amount of $3,564 during the year ended December 31, Year 2.

Questions

1. Using the information provided above, compute the net cash flow provided by (used in) operating, investing and financing activities using the indirect method.

2. Prepare a cash flow statement for the year ended December 31, Year 2.

One year ago, ShopFast issued 15-year annual bonds at par. The bonds had a coupon rate of 6.5 percent and had a face value of $1,000. Today, applicable yield to maturity to ShopFast’s bonds is 7%. What was the change in price in ShopFast’s bonds from last year to today?
A) -55.56t

B) 51.94
C) -$43.73
D) 58.71
E) The bond price did not change.

WallStores needs to raise $2.8 million for expansion. The firm wants to raise this money by selling 20-year, zero-coupon bonds with a par value of $1,000. The market yield on similar bonds is 6.49 percent. How many bonds must the company sell to raise the money it needs? Assume annual compounding.
A) 9,847 bonds

B) 11,144 bonds C) 12,800 bonds D) 10,508 bonds E) 11,315 bonds

Consider the following stock price and shares outstanding information.

1. Compute the beginning and ending values for a price-weighted index and a market-value-weighted index. Assume a base value of 100 and Year 1 as the base period. Do not round intermediate calculations. Round your answers to two decimal places.

             PWI_{Year 1}:

             PWI_{Year 2}:

             VWI_{Year 1}:

             VWI_{Year 2}:

2. Compute the percentage change in the value of each index during the year. Do not round intermediate calculations. Round your answers to two decimal places.

   Percentage change in PWI:   %

   Percentage change in VWI:   %

3. Compute the percentage change for an unweighted index assuming $1,000 is invested in each stock. Do not round intermediate calculations. Round your answer to two decimal places.

     %

Last year Carson Industries issued a 10-year, 15% semiannual coupon bond at its par value of $1,000. Currently, the bond can be called in 6 years at a price of $1,075 and it sells for $1,280.

1. What are the bond's nominal yield to maturity and its nominal yield to call? Do not round intermediate calculations. Round your answers to two decimal places.

   YTM: %

   YTC: %

   Would an investor be more likely to earn the YTM or the YTC?

• What is the current yield? (Hint: Refer to Footnote 6 for the definition of the current yield and to Table 7.1) Round your answer to two decimal places.

  %

  Is this yield affected by whether the bond is likely to be called?

  1. If the bond is called, the capital gains yield will remain the same but the current yield will be different.
  2. If the bond is called, the current yield and the capital gains yield will both be different.
  3. If the bond is called, the current yield and the capital gains yield will remain the same but the coupon rate will be different.
  4. If the bond is called, the current yield will remain the same but the capital gains yield will be different.
  5. If the bond is called, the current yield and the capital gains yield will remain the same.
• What is the expected capital gains (or loss) yield for the coming year? Use amounts calculated in above requirements for calculation, if required. Negative value should be indicated by a minus sign. Round your answer to two decimal places.

  %

  Is this yield dependent on whether the bond is expected to be called?
  1. The expected capital gains (or loss) yield for the coming year does not depend on whether or not the bond is expected to be called.
  2. If the bond is expected to be called, the appropriate expected total return is the YTM.
  3. If the bond is not expected to be called, the appropriate expected total return is the YTC.
  4. If the bond is expected to be called, the appropriate expected total return will not change.
  5. The expected capital gains (or loss) yield for the coming year depends on whether or not the bond is expected to be called.