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TT05 Question

The document provides the financial statements of Zumbra Company for 2017 and 2016, including the balance sheet showing assets of $126,000 and $108,000, and liabilities and equity of the same amounts. The income statement shows sales of $242,000, costs of $175,000, and net income of $32,000. Additional notes provide details on dividends, equipment sale, depreciation expense, and that all sales and purchases are on account.

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Trinh Nguyen Linh Chi
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242 views2 pages

TT05 Question

The document provides the financial statements of Zumbra Company for 2017 and 2016, including the balance sheet showing assets of $126,000 and $108,000, and liabilities and equity of the same amounts. The income statement shows sales of $242,000, costs of $175,000, and net income of $32,000. Additional notes provide details on dividends, equipment sale, depreciation expense, and that all sales and purchases are on account.

Uploaded by

Trinh Nguyen Linh Chi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

TUTORIAL TEST 05

The following are the financial statements of Zumbra Company.

ZUMBRA COMPANY
Comparative Balance Sheet
December 31
2017 2016
Assets
Cash US 38,000 US 20,000
Accounts Receivable 30,000 14,000
Inventory 27,000 20,000
Equipment 60,000 78,000
Accumulated depreciation--equipment (29,000) (24,000)
Total US 126,000 US 108,000

Liabilities and Stockholders' Equity


Accounts payable US 24,000 US 15,000
Income taxes payable 7,000 8,000
Bonds payable 27,000 33,000
Common stock 18,000 14,000
Retained earnings 50,000 38,000
Total US 126,000 US 108,000

ZUMBRA COMPANY
Income Statement
For the Year ended December 31, 2017

Sales revenue US$242,000


Cost of goods sold 175,000
Gross profit 67,000
Operating expenses 24,000
Income from operations 43,000
Interest expense 3,000
Income before income taxes 40,000
Income tax expense 8,000
Net income US$32,000

Additional data:
1. Dividends declared and paid were $20,000.
2. During the year equipment was sold for $8,500 cash. This equipment cost $18,000
originally and had a book value of $8,500 at the time of sale.
3. All depreciation expense, $14,500, is in the operating expenses.
4. All sales and purchases are on account.
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Instructions
(a) Prepare a statement of cash flows using the indirect method.
(b) Compute free cash flow.

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