Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 50

Miracle Tool, Inc., sells a single product (a combination screwdriver, pliers, hammer, and crescent wrench) exclusively through television advertising.he comparative income statements and balance sheets are for the past two years.
Additional Information
The following information regarding the company's operations in 2015 is available from the company's accounting records:
1.arly in the year the company declared and paid a $4,000 cash dividend.
2.uring the year marketable securities costing $15,000 were sold for $14,000 cash, resulting in a $1,000 nonoperating loss.
3.he company purchased plant assets for $20,000, paying $2,000 in cash and issuing a note payable for the $18,000 balance.
4.uring the year the company repaid a $10,000 note payable, but incurred an additional $18,000 in long-term debt as described in 3.5.he owners invested $15,000 cash in the business as a condition of the new loans described in paragraph 4.


Instructions
a.repare a worksheet for a statement of cash flows, following the general format illustrated in Exhibit 13-7. Note: If this problem is completed as a group assignment, each member of the group should be prepared to explain in class all entries in the worksheet, as well as the group's conclusions in parts c, d, and e.
b.repare a formal statement of cash flows for 2015, including a supplementary schedule of noncash investing and financing activities.Use the format illustrated in Exhibit 13-8.ash provided by operating activities is to be presented by the indirect method.
c.xplain how Miracle Tool, Inc., achieved positive cash flows from operating activities, despite incurring a net loss for the year.
d.oes the company's financial position appear to be improving or deteriorating Explain.
e.oes Miracle Tool, Inc., appear to be a company whose operations are growing or contracting Explain.
f.ssume that management agrees with your conclusions in parts c, d, and e.hat decisions should be made and what actions (if any) should be taken Explain.