(Solution) - Data from Jensen s 2008 Balance Sheet and Income statement and -(2025 Original AI-Free Solution)

Paper Details

Data from Jensen's 2008 Balance Sheet and Income statement and statement of comprehensive income follow:

Additional data:
1. Equipment that cost $10,000 and was 40% amortized was sold in 2008.
2. Cash dividends were declared and paid during the year.
3. Common shares were issued in exchange for land.
4. Investments that cost $35,000 and had a fair value of $37,000 at December 31, 2007 were sold during the year.
5. Cost of goods sold includes $115,000 of direct labour and benefits and $11,700 of pension costs. Operating expenses include $76,000 of wages and $8,000 of pension expense.

Questions
1. Prepare the "cash provided by (used in) operations" section of the statement of cash flows, assuming the indirect method is used an all necessary information is provided
2. Identify the amounts that would be reported within this section if the direct method were used for the following items:
a. Cash paid to and on behalf of employees.
b. Cash received from customers.
c. Income taxes paid.
d. Cash paid to suppliers for goods and services.
e. Interest paid.
3. Prepare a statement of cash flows using the indirect method, including all required disclosures.
4. Prepare the "cash provided by (used in) operating activities" section under the direct method.
5. Comment on the company's cash activities during the year.
6. Assume that you are a shareholder of Jensen Limited. What do you think of the dividend payout ratio that is highlighted in the statement of cash flows? Do you see any reasons that would help explain Jensen's dividend policy? If yes, what arethey?