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Exercise 12-8

 

Your answer is correct.

 

 

Shown below are comparative balance sheets for Padgett
Company.

PADGETT COMPANY
Comparative Balance Sheets
December 31

Assets

 

2012

 
 

2011

 

Cash

 

$ 24,480

 
 

$ 7,920

 

Accounts receivable

 

31,680

 
 

27,360

 

Inventory

 

60,120

 
 

68,040

 

Land

 

28,800

 
 

36,000

 

Equipment

 

93,600

 
 

72,000

 

Accumulated depreciation—equipment

 

(23,760

)

 

(11,520

)

Total

 

$214,920

 

 

$199,800

 

Liabilities and Stockholders’ Equity

 
 
 
 
 
 

Accounts payable

 

$ 14,040

 
 

$ 15,480

 

Bonds payable

 

54,000

 
 

72,000

 

Common stock ($1 par)

 

77,760

 
 

62,640

 

Retained earnings

 

69,120

 

 

49,680

 

Total

 

$214,920

 

 

$199,800

 

Additional information:

1.

 

Net income for 2012 was $33,480.

2.

 

Depreciation expense was $12,240.

3.

 

Cash dividends of $14,040 were declared and paid.

4.

 

Bonds payable amounting to $18,000 were redeemed for cash
$18,000.

5.

 

Common stock was issued for $15,120 cash.

6.

 

No equipment was sold during 2012.

7.

 

Land was sold for its book value.

(a) Prepare a statement of cash flows for 2012 using the indirect
method. (Show amounts that decrease cash flow with
either a – sign e.g. -15,000, or in parenthesis e.g.
(15,000)).
(b) Compute these cash-based ratios: (Round ratios
to 2 decimal places, e.g. 2.56.)

(1) Current cash debt coverage.
(2) Cash debt coverage.
 

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