Business, 04.07.2020 16:01 saharalover11
CA5-5 WRITING (Cash Flow Analysis) The partner in charge of the Kappeler Corporation audit comes by your desk and leaves a letter he has started to the CEO and a copy of the cash flow statement for the year ended December 31, 2017. Because he must leave on an emergency, he asks you to finish the letter by explaining: (1) the disparity between net income and cash flow, (2) the importance of operating cash flow, (3) the renewable source(s) of cash flow, and (4) possible suggestions to improve the cash position.
KAPPELER CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2017
Cash flows from operating activities
Net income
$ 100,000â
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense
$â10,000â
Amortization expense
1,000â
Loss on sale of fixed assets
5,000â
Increase in accounts receivable (net)
(40,000)
Increase in inventory
(35,000)
Decrease in accounts payable
â(41,000)
â(100,000)
Net cash provided by operating activities â0â
Cash flows from investing activities
Sale of plant assets
25,000â
Purchase of equipment
(100,000)
Purchase of land
â(200,000)
Net cash used by investing activities
(275,000)
Cash flows from financing activities
Payment of dividends
(10,000)
Redemption of bonds
â(100,000)
Net cash used by financing activities
â(110,000)
Net decrease in cash
(385,000)
Cash balance, January 1, 2017
ââ400,000â
Cash balance, December 31, 2017
$ââ15,000â
ââ â ââââââ
Date
President Kappeler, CEO
Kappeler Corporation
125 Wall Street
Middleton, Kansas 67458
Dear Mr. Kappeler:
I have good news and bad news about the financial statements for the year ended December 31, 2017. The good news is that net income of $100,000 is close to what we predicted in the strategic plan last year, indicating strong performance this year. The bad news is that the cash balance is seriously low. Enclosed is the Statement of Cash Flows, which best illustrates how both of these situations occurred simultaneously â¦
Instructions
Complete the letter to the CEO, including the four components requested by your boss.
Answers: 1
Business, 22.06.2019 00:30
Norton manufacturing expects to produce 2,900 units in january and 3,600 units in february. norton budgets $20 per unit for direct materials. indirect materials are insignificant and not considered for budgeting purposes. the balance in the raw materials inventory account (all direct materials) on january 1 is $38,650. norton desires the ending balance in raw materials inventory to be 10% of the next month's direct materials needed for production. desired ending balance for february is $51,100. what is the cost of budgeted purchases of direct materials needed for january? $58,000 $65,200 $26,550 $25,150
Answers: 1
Business, 22.06.2019 04:30
Georgia's gross pay was 35,600 this year she is to pay a federal income tax of 16% how much should georgia pay in federal income ax this year
Answers: 1
Business, 22.06.2019 20:00
Harry is 25 years old with a 1.55 rating factor for his auto insurance. if his annual base premium is $1,012, what is his total premium? $1,568.60 $2,530 $1,582.55 $1,842.25
Answers: 1
Business, 22.06.2019 20:40
Which of the following would indicate an improvement in a company's financial position, holding other things constant? a. the inventory and total assets turnover ratios both decline.b. the debt ratio increases.c. the profit margin declines.d. the times-interest-earned ratio declines.e. the current and quick ratios both increase.
Answers: 3
CA5-5 WRITING (Cash Flow Analysis) The partner in charge of the Kappeler Corporation audit comes by...
Mathematics, 26.09.2019 01:30
Social Studies, 26.09.2019 01:30
Biology, 26.09.2019 01:30
Mathematics, 26.09.2019 01:30
Biology, 26.09.2019 01:30
Biology, 26.09.2019 01:30