Answer Happy

LO3 P12-5A. Analyzing Cash Flow Ratios Pearce Enterprises reported the following information for the past Prepare a statement of cash flows year of operations: b. a. b. C. d. e. f. Transaction Recorded credit sales of $9,000 Collected $4,000 owed from customers. Purchased $28,000 of equipment on long-term credit Purchased cash $16,000 of equipment for Free Cash Flow $250,000 Operating-Cash- Flow-to-Current- Liabilities Ratio 1.0 times Paid $10,000 of wages with cash Recorded utility bill of $1,750 that has not been paid For each transaction, indicate whether the ratio will (1) increase, (D) decrease, or (N) have no effect. Operating-Cash- Flow-to-Capital- Expenditures Ratio 3.0 times

a. b. C. d. e. f. Transaction Recorded credit sales of $9,000 Collected $4,000 owned from customers Purchased $28,000 of equipment on long term credit Purchased $16,000 of equipment for cash Paid $10,000 of wages for cash. Recorded utility bill of $1,750 that has not been paid Free Cash Flow $250,000 (N) No effect Operating Operating Cash Flow to Cash Flow to Current Liabnilities. Ratio 1.0 times Capital Expenditures ratio 3.0 times (N) No effect (N) No effect. For each transaction, indicate whether the ratio will (1)increase, (D) decrease, or (N) have no effect. Sample response