1) The 2016 comparative income statement and the 2016 comparative balance sheet of AMK, Inc. have just been distributed at a meeting of the company’s Board of Directors. The members of the board raise a fundamental question: Why is the cash balance so low? This question is especially hard to understand because 2016 showed record profits. As the controller of the company, you must answer the question.
a) Compute the amount of AMK, Inc. acquisition of plant assets. AMK, Inc. disposed of plant assets at book value. The cost and accumulated depreciation of the disposed asset was $44,400. No cash was received upon disposal.
b) Compute new borrowing or payment of long-term notes payable, with AMK, Inc. having only one long-term note payable transaction during the year.
c) Compute the issuance of common stock with AMK, Inc. having only one common stock transaction during the year.
d) Compute the payment of cash dividends.
e) Using the data above with the included financial statements, prepare the company’s statement of cash flows – indirect method – for the year ended December 31, 2016.
f) Considering net income and the company’s cash flows during 2016, was it a good year or a bad year? Give your reasons.
2.) Using the Walmart, Inc.. Statement of Cash flows on the following page, answer the following questions:
a) Which method does Walmart use to report net cash flows from operating activities? How do you know?
b) Walmart earned net income for the period ending 2019. Did operations provide cash or use cash during the period ending 2019? Give the amount. How did operating cash during the period ending 2018 compare with the period ending 2019?
c) For the period ended January 31, 2019, did Walmart pay cash dividends? If so, how much?
d) For the period ending January 31 2019, did Walmart use cash to purchase property, plant, and equipment? If so, how much?