Prepare a statement of cash flows using the indirect method

Assignment Help Finance Basics

Reference no: EM131792289

Question: The balance sheets of Global Trading Company follow:

Additional Information: • The company reported a net loss of $279,500 during 2014.

• There are no income taxes.

• Goodwill as of December 31, 2013, was part of an acquisition made during 2013.

• The company's bank provides a working capital loan to a maximum of 75% of net accounts receivable and inventory.

Required: 1. Prepare a statement of cash flows using the indirect method for the year ended December 31, 2014. 2. On the basis of available information, assess the financial performance of the company during 2014. In answering this part, consider both the net income and cash flows of the company. Also evaluate the future prospects of the company.

3. Assuming that the bad debt expense during 2014 was $55,000, calculate the amount of bad debts written off during the year. Further assume that the company collected $1,250,000 cash from its customers during 2014, and then compute the sales revenue for the year. You may assume that all sales are credit sales.

4. In answering this part, assume that Global uses the first-in, first-out (FIFO) inventory method. On December 31, 2014, the company purchased $35,000 worth of inventory on credit from a supplier. The transaction was inadvertently not recorded because physical possession was not obtained as of December 31, 2014. Discuss the effect of this omission on Global Trading Company's financial statements.

Reference no: EM131792289

Questions Cloud

Characteristics of each form of leadership : Provide one or more examples to support the definition or characteristics of each form of leadership.

How items should disclosed in hoffman statement of cash flow : Write a brief explanation of how each of the items above should be disclosed in Hoffman's statement of cash flows for 2014.

What is the company adjusted bank balance : Reconciling items included outstanding checks of $2,400 and a deposit in transit of $9,400. What is the company's adjusted bank balance

Create the perfect storm for adolescents struggling : Explain how the position is related to the biological and/or physiological development as well as psychological development of adolescent girls.

Prepare a statement of cash flows using the indirect method : Prepare a statement of cash flows using the indirect method for the year ended December 31, 2014. 2. On the basis of available information.

What you have learned about social change as a social issue : What you have learned about social change as a research problem. Support your insights with academic citations from the Learning Resources.

Explains how three mission values relate to personal beliefs : Student describes at least 2 practical ways to continue participation. Student explains how 3 Mission values relate to personal beliefs

Create the xyz company report on the balance sheet : Prepare the January 1 and December 31 general journal entries for XYZ Company

Explain importance of culturally appropriate health policies : Explain the importance of culturally appropriate health policies. Explain how you might engage the community to be part of the voice when developing a policy.

User Account

All Pages