Direct and indirect method

Assignment Help Financial Accounting

Reference no: EM13915255

Prepare statement of cash flows using the direct and indirect method.

UNITED BRANDS CORPORATION
Comparative Balance Sheet
December 31, 2016 and 2015
($ in millions)
Assets	2016	2015
Cash	$29	$20
Accounts Receivable	32	30
Short-term Investments	12	0
Inventory	46	50
Prepaid Insurance	3	6
Land	80	60
Building and Equipment	81	75
Less: Accumulated Depreciation	-16	-20
	$267	$221
Liabilities
Accounts Payable	$26	$20
Salaries Payable	3	1
Income Tax Payable	6	8
Notes Payable	20	0
Bonds Payable	35	50
Less: Discount on bonds	-1	-3
Shareholder's Equity
Common Stock	130	100
Paid-in Capital	29	20
Retained Earnings	19	25
	$267	$221
Income Statement
Sales Revenue	$100
Cost of Goods Sold	60
Gross Profit		40
Operating Expenses:
Salaries Expense	13
Depreciation Expense	3
Bond Interest Expense	5
Insurance Expense	7
Total Operating Expenses		28
Other Income (Expenses)
Investment Revenue	3
Gain on Sale of Land	8
Loss on Sale of Equipment	-2
Total other income (expenses)		9
Income before income taxes		21
Income tax expense		9
Net Income		12

Additional Information

1. Company land, purchased in a previous year for $10 million, was sold.

2. Equipment that originally cost $14 million and which was one-half depreciation, was sold.

3. The common shares of Mazuma C. were purchased for $12 million as a short-term investment.

4. Property was purchased for $30 million cash for use as a parking lot.

5. On December 30, 2016, new equipment was acquired by issuing a 12%, five-year, $20 million note payable to seller.

6. On January 1, 2016, $15 million of bonds (issued 20 years ago at their face amount) was retired at maturity.

7. The increase in common stock account is attributable to the issuance of a 10% stock dividend (1 million share) and the subsequent sale of 2 million shares of common stock. The market price of the $10 par value common stock was $13 per share on the dates of both transactions.

Reference no: EM13915255

Questions Cloud

Handle the increased number of con-ventions : In early 2008, you purchased and remodeled a 120-room hotel to handle the increased number of con-ventions coming to town. By mid-2008, it became apparent that the recession would kill the demand for conventions.

What is the corrected operating income : TeleMedia is a technology firm that reported an operating loss of $15 million in the most recent year (just ended), after R&D expenses of $100 million. If R&D has a 3--year life and the company’s R&D expenses in the last three years have been $30 mi..

Provide plausible rationale for the stock repurchase : MGM Grand said it plans to eventually buy back up to 20% of its shares (from stockholders) and announced a tender offer for half of them at a 31% premium (over the market price). Provide a plausible rationale for the stock repurchase.

What was her approximate real rate of return on investment : Christina purchased 200 shares of stock at a price of $62.30 a share and sold them for $70.25 a share. She also received $148 in dividends. If the inflation rate was 4.2 percent, What was her approximate real rate of return on this investment? Over a..

Direct and indirect method : Prepare statement of cash flows using the direct and indirect method.

Workers at a wage : A firm can hire 10 workers at a wage of $10 but has to pay a wage of $12 to ALL workers to get the 11th worker. What is the marginal cost of adding the 11th worker.

Closed the revenue expense and dividend accounts : Inman Co. completed the following transactions in 2013, the first year of operation:

The application of knowledge to an actual organisation : This assignment is an exercise in the application of knowledge to an actual organisation and the compilation and presentation of the findings in the format of a sophisticated report - well edited, attractive, and professionally laid out and academica..

What will the operating cash flow be if output falls : At an output level of 15,400 units, you have calculated that the degree of operating leverage is 2.00. The operating cash flow is $58,000 in this case. Ignoring the effect of taxes, what are fixed costs? What will the operating cash flow be if output..

User Account

All Pages