Amherst,Inc.had the Following Balance Sheet at December 31,2012

question 10

Essay

Amherst,Inc.had the following balance sheet at December 31,2012:

During 2013 the following occurred.
1.Amherst liquidated its available for sale investment portfolio at a loss of $5,000.
2.A tract of land was purchased for $38,000.
3.An additional $30,000 in common stock was issued at par.
4.Dividends totaling $10,000 were declared and paid to stockholders.
5.Net income for 2013 was $35,000,including $12,000 in depreciation expense.
6.Land was purchased through the issuance of $30,000 of additional bonds.
7.At December 31,2013,Cash was $70,200,Accounts Receivable was $42,000 and Accounts Payable was $40,000.
Required:
(a)What were Amherst's cash flows from operating activities for the year ended December 31,2013?
(b) Compute Amherst's free cash flow and current cash debt coverage for 2013.
(c) How does information in the balance sheet and statement of cash flows help the user or analyst of the financial statements?

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Definitions:

Trial Balance

A financial statement that lists all balances in a firm's general ledger accounts at a specific point in time to verify that debits equal credits.

Account Balance

The amount of money in a financial repository, such as a bank account, at any given moment.

Interest Receivable

An accounting term referring to the interest income that has been earned but not yet received in cash.

Accounts Payable

Liabilities of a business that represent amounts due to suppliers or creditors for goods and services received but not yet paid for.