Accounts receivable decreased by 25000 accounts payable


1. The following is selected information from Flimsy Company for the fiscal years ended December 31, 2014: Flimsy Company had net income of $1,225,000. Depreciation was $500,000, purchases of plant assets were $1,250,000, and disposals of plant assets for $500,000 resulted in a $50,000 gain. Stock was issued in exchange for an outstanding note payable of $725,000. Accounts receivable decreased by $25,000. Accounts payable decreased by $40,000. Dividends of $300,000 were paid to shareholders. Flimsy Company had interest expense of $50,000. Cash balance on January 1, 2014 was $250,000.

Prepare Flimsy Company's statement of cash flows for the year ended December 31, 2014 using the indirect method.

2. Flop Company manufactures 10,000 units of widgets for use in its annual production. Costs are direct materials $20,000, direct labor $55,000, variable overhead $45,000, and fixed overhead $70,000. Flimsy Company has offered to sell Flop 10,000 units of widgets for $18 per unit. If Flop accepts the offer, some of the facilities presently used to manufacture widgets could be rented to a third party at an annual rental of $15,000. Additionally, $4 per unit of the fixed overhead applied to widgets would be totally eliminated.

Prepare an incremental analysis schedule to demonstrate if Flop should accept Flimsy's offer.

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Financial Accounting: Accounts receivable decreased by 25000 accounts payable
Reference No:- TGS01215872

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