# Shown below are comparative balance sheets for Padgett Company. - 14706

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Exercise 12-8

Shown below are comparative balance sheets for Padgett Company.

 PADGETT COMPANY Comparative Balance Sheets December 31 Assets 2012 2011 Cash \$ 24,480 \$ 7,920 Accounts receivable 31,680 27,360 Inventory 60,120 68,040 Land 28,800 36,000 Equipment 93,600 72,000 Accumulated depreciation—equipment (23,760 ) (11,520 ) Total \$214,920 \$199,800 Liabilities and Stockholders’ Equity Accounts payable \$ 14,040 \$ 15,480 Bonds payable 54,000 72,000 Common stock (\$1 par) 77,760 62,640 Retained earnings 69,120 49,680 Total \$214,920 \$199,800

 1 Net income for 2012 was \$33,480. 2 Depreciation expense was \$12,240. 3 Cash dividends of \$14,040 were declared and paid. 4 Bonds payable amounting to \$18,000 were redeemed for cash \$18,000. 5 Common stock was issued for \$15,120 cash. 6 No equipment was sold during 2012. 7 Land was sold for its book value.

(a) Prepare a statement of cash flows for 2012 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000)).

(b) Compute these cash-based ratios: (Round ratios to 2 decimal places, e.g. 2.56.)

(1) Current cash debt coverage.

(2) Cash debt coverage.

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