(a) Prepare Teal’s cash flows from operating activities section of the statement of cash flows using the direct method. (b) Prepare Teal’s cash flows from operating activities section of the statement of cash flows using the indirect method.
Brief Exercise 24-8 (a) The current ratio of a company is 5:1 and its acid-test ratio is 1:1. If the inventories and prepaid items amount to $530,000, what is the amount of current liabilities? (b) A company had an average inventory last year of $209,000 and its inventory turnover was 6. If sales volume and unit cost remain the same this year as last and inventory turnover is 8 this year, what will average inventory have to be during the current year? (c) A company has current assets of $90,000 (of which $44,000 is inventory and prepaid items) and current liabilities of $44,000. What is the current ratio? What is the acid-test ratio? If the company borrows $14,000 cash from a bank on a 120-day loan, what will its current ratio be? What will the acid-test ratio be? (d) A company has current assets of $628,000 and current liabilities of $255,000. The board of directors declares a cash dividend of $195,000. What is the current ratio after the declaration but before payment? What is the current ratio after the payment of the dividend? Exercise 24-3 Kingbird Company is involved in four separate industries. The following information is available for each of the four industries. (a)
Revenue test.
(b)
Operating profit (loss) test.