Use the Following Financial Statements and Additional Information to (1)prepare

question 14

Essay

Use the following financial statements and additional information to (1)prepare a statement of cash flows for the year ended December 31,2013 using the indirect method,and (2)compute the company's cash flow on total assets ratio for 2013.
Additional Information
a.A $20,000 note payable is retired at its carrying value in exchange for cash.
b.The only changes affecting retained earnings are net income and cash dividends paid.
c.New equipment is acquired for $120,000 cash.
d.Received cash for the sale of equipment that had cost $85,000,yielding a gain of $4,700.
e.Prepaid expenses relate to Other Expenses on the income statement.
f.All purchases and sales of merchandise inventory are on credit.

Understand the concept of inventory turnover and how it impacts business operations.

Calculate inventory turnover using beginning inventory, purchases, and ending inventory values.

Calculate average inventory using beginning and ending inventory values.

Analyze the operational implications of changes in inventory levels over specific periods.

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Definitions:

General Partner

A member of a partnership who has unlimited liability and is responsible for the management of the partnership.

Limited Partnership

A business structure with at least one general partner who manages the business and assumes unlimited liability, and one or more limited partners who provide capital and have limited liability.

Limited Partnership

A partnership structure where at least one partner has unlimited liability (general partner) and one or more partners have limited liability (limited partners), restricting their losses to their investment in the partnership.

Limited Liability Partnership

A business structure where partners have limited liabilities, protecting personal assets from the debts of the business.