1.
To provide: The answer to the following questions using the statement of
a. Is Company S generating cash from its operations?
b. What investing activities the company has been involved in over the past three years. Are investing activities an overall source or use of funds for the company?
c. What financing activities has the company been undertaking in the past three years? Has it been paying dividends to its common stockholders?
d. How will the closure of the Kmart and S stores impact the 2016 statement of cash flows?
2.
To provide: The answer to the following questions using the statement of cash flows of the company W:
a. Is Company W generating cash from its operations?
b. What investing activities the company has been involved in over the past three years. Are investing activities an overall source or use of funds for the company?
c. What financing activities has the company been undertaking in the past three years? Has it been paying dividends to its common stockholders?
d. How will the closure of the W stores impact the 2016 statement of cash flows?
3.
To identify: The Company which is healthier by using the statement of cash flows.
4.
The reason for using fiscal year-ends around January 31 rather than using a calendar year-end of December 31 by the companies S and W.
Want to see the full answer?
Check out a sample textbook solutionChapter 13 Solutions
Managerial Accounting (5th Edition)
- Please see below. I need help with the revised net income and the revised profit margin, as my answers came back as incorrect. Note that the answers are not Revised net income = $25,472 Revised profit margin % = 2.24% either. Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance. Accounts Payable $ 30,016 Accounts Receivable 19,264 Accumulated Depreciation—Equipment 76,160 Cash 8,960 Common Stock 39,200 Cost of Goods Sold 688,016 Freight-Out 6,944 Equipment 175,840 Depreciation Expense 15,120 Dividends 13,440 Gain on Disposal of Plant Assets 2,240 Income Tax Expense 11,200 Insurance Expense 10,080 Interest Expense 5,600 Inventory 29,344 Notes Payable 48,720…arrow_forwardApple mart in Nizwa had faced a serious working capital issues during the last year due to the pandemic. In the year 2021 the business wants to improve its internal performance. Hence, it needs to estimate the amount of money to be invested further to keep up the required level of working capital. The finance department had provided with the following information to the management accounting team to work out the Average inventory processing period. The business has started its operations in the last year with an opening stock of OMR 10,000 and purchased OMR 40,000 worth goods from its supplier. Later, the business has rejected OMR 4,000 worth goods after the quality check conducted by the stores department. The total sales of the company for the year 2020 was OMR 80,000 out of which OMR 30,000 was on cash basis. The finance department has also provided with the following details; Identify the Average inventory processing period from the following Options?arrow_forwardApple mart in Nizwa had faced a serious working capital issues during the last year due to the pandemic. In the year 2021 the business wants to improve its internal performance. Hence, it needs to estimate the amount of money to be invested further to keep up the required level of working capital. The finance department had provided with the following information to the management accounting team to work out the Average inventory processing period. The business has started its operations in the last year with an opening stock of OMR 10,000 and purchased OMR 40,000 worth goods from its supplier. Later, the business has rejected OMR 4,000 worth goods after the quality check conducted by the stores department. The total sales of the company for the year 2020 was OMR 80,000 out of which OMR 30,000 was on cash basis. The finance department has also provided with the following details; Amount in OMR Particulars Debtors at the beginning Debtors at the end Creditors at the beginning Creditors…arrow_forward
- Diamond Computers, which is owned and operated by Dale Diamond, manufactures and sells different types of computers. The company has reported profits every year since its inception in 2002 and has applied for a bank loan near the end of 2021 to upgrade manufacturing facilities. These upgrades should significantly boost future productivity and profitability. In preparing the financial statements for the year, the chief accountant, Sandy Walters, mentions to Dale that approximately $80,000 of computer inventory has become obsolete and a write-down of inventory should be recorded in 2021. Dale understands that the write-down would result in a net loss being reported for company operations in 2021. This could jeopardize the company’s application for the bank loan, which would lead to employee layoffs. Dale is a very kind, older gentleman who cares little for his personal wealth but who is deeply devoted to his employees’ well-being. He truly believes the loan is necessary for the company’s…arrow_forwardPlease see below. The information is given. The picture includes what I need help with answering. Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance. Accounts Payable $ 30,016 Accounts Receivable 19,264 Accumulated Depreciation—Equipment 76,160 Cash 8,960 Common Stock 39,200 Cost of Goods Sold 688,016 Freight-Out 6,944 Equipment 175,840 Depreciation Expense 15,120 Dividends 13,440 Gain on Disposal of Plant Assets 2,240 Income Tax Expense 11,200 Insurance Expense 10,080 Interest Expense 5,600 Inventory 29,344 Notes Payable 48,720 Prepaid Insurance 6,720 Advertising Expense 37,520 Rent Expense 38,080 Retained Earnings 15,904 Salaries and…arrow_forwardInfinity Designs, an interior design company,has experienced a drop in business due toan increase in interest rates and acorresponding slowdown in remodelingprojects. To smulate business, thecompany is considering exhibing at theHome and Garden Expo. The exhibit willcost the company $12,000 for space. At theshow, Infinity Designs will present a slideshow on a PC, pass out brochures that areprinted previously, (the company printedmore than needed), and show its porolio ofpreviousjobs.The companyesmates thatrevenue will increaseby $36,000 over thenext year as a resultof the exhibit. For theprevious year, profitwas as follows:Revenue $201,000Less:Design supplies (variable cost) $15,000Salary of Samantha Spade (owner) 80,000Salary of Kim Bridesdale (full meemployee)55,000Rent 18,000Ulies 6,000Depreciaon of office equipment 3,600Prinng of adversing materials 700Adversing in Middleton Journal 2,500Travel expenses other than depreciaonof autos (variable cost)$3,000Depreciaon of company cars…arrow_forward
- Chadwick Enterprises, Inc., operates several restaurants throughout the Midwest. Three of its restaurants located in the center of a large urban area have experienced declining profits due to declining population. The company's management has decided to test the restaurants for possible impairment. The relevant information is presented below. Book value $6.5 million Estimated undiscounted sum of future cash flows 6.0 million Fair value of assets 8.5 million Fair value of liabilities 3.0 million Question What is the amount of the impairment loss, if any? $500,000 $1,000,000 $2,000,000 No impairment is indicatedarrow_forwardOne of the major advantages of small businesses is that the investment for running the business is not a major issue this statement is a.Fully false b.Partly false c.Fully true d. Partly true In one of the reputed firm total number of employees were more than 150 and the annual sales in 2019 was around 5 million OMR. In 2020 the company had a huge crisis because of the Corona pandemic which leads them to decrease their number of workers to 55, as a cosuquance their annual sales drop to 723,000 OMR. Based on last year data and according to the Ministry of commerce and industry the business will be categorized under a.None of the given options b.Micro business enterprise c.Small business enterprise d.Medium business enterprise Which of the following Statement(s) is/are Correct? Statement 1: Entrepreneurship is a systematic process of applying creativity and innovation to needs and opportunities in the marketplace Statement2: Entrepreneurship involves using old ideas to create a product…arrow_forwardReally need help with this please and thank you. Wolford Department Store is located in midtown Metropolis. During the past several years, net income has been declining because suburban shopping centers have been attracting business away from city areas. At the end of the company’s fiscal year on November 30, 2017, these accounts appeared in its adjusted trial balance. Prepare a multiple step income statement, retained earnings statement, and a balance sheet. Accounts Payable $ 30,016 Accounts Receivable 19,264 Accumulated Depreciation—Equipment 76,160 Cash 8,960 Common Stock 39,200 Cost of Goods Sold 688,016 Freight-Out 6,944 Equipment 175,840 Depreciation Expense 15,120 Dividends 13,440 Gain on Disposal of Plant Assets 2,240 Income Tax Expense 11,200 Insurance Expense 10,080 Interest Expense 5,600 Inventory 29,344 Notes Payable 48,720 Prepaid Insurance 6,720 Advertising Expense 37,520 Rent Expense 38,080…arrow_forward
- Katie Murphy is preparing for a meeting with her banker. Her business is finishing its fourth year of operations. In the first year, it had negative cash flows from operations. In the second and third years, cash flows from operations were positive. However, inventory costs rose significantly in Year 4, and cash flows from operations will probably be down 25%. Murphy wants to secure a line of credit from her banker as a financing buffer. From experience, she knows the banker will scrutinize operating cash flows for Years 1 through 4 and will want a projected number for Year 5. Murphy knows that a steady progression upward in operating cash flows for Years 1 through 4 will help her case. She decides to use her discretion as owner and considers several business actions that will turn her operating cash flow in Year 4 from a decrease to an increase. Required 1. Identify two business actions Murphy might take to improve cash flows from operations. 2. Comment on the ethics and possible…arrow_forwardIn this scenario, Finance is facing a negative cash position. Currently the department is both issuing and retiring $6,000 of long-term debt. Use the sliders below to reassess the company's financing decisions and protect against an Emergency Loan. Task Question You have invested $6,000 in plant improvements and financed $6,000 Long-Term debt to pay for it. You have also elected to retire $6,000 of Long- Term Debt. Now, your closing cash position reads -$3,000. Retire Long Term Debt $0 Issue Long Term Debt $0 $3,600 $6,000 $10,000 $10,000 Closing Cash Position ($5,400) Hint Submit Total Raised Capital: $6,000 Spence 0 Starting Cash Position January 1, 2019 Cash Flow Cash from Operating Cash from Investing Cash from Financing . Dividends Paid • Issue Stock . Retire Stock .Net Change in Cument Debt • Issue Long-Term Debt . Retire Long-Term Debt Closing Cash Position December 31, 2019 Total Spent Capital: $6,000 $3,431 ($6,431) $0 SO $0 $0 $0 $0 $6,000 ($6,000) ($3,000) K Click to Expand✓…arrow_forwardHead DonuLs Inc. is a retailer of designer headphones, earphones, and hands-free audio devices. Polly Ester, the company president, is reviewing the company's financial statements after the close of the fiscal year and is troubled that earnings decreased by 10%. She shares her concerns with the company's chief accountant, Lucas Simmons, who points out that the drop in earnings was balanced by a 20% increase in cash flows, from operating activities. Polly is encouraged by the increase in cash flows from operating activities, but is worried that investors might miss this information because it is “buried" in the statement of cash flows. To make it easier for investors to find this information, she instructs Lucas to include an operating cash flow per share number on the face of the income statement, directly below earnings per share. While Lucas is concerned about using such an unconventional financial reporting tactic, he agrees to include the information on the income statement.Is…arrow_forward