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We obtain the following 2020 forecasts of selected financial statement line items for Journey Company. 2019 Actual 2020 Est. $535,667 $559,772 50,725 46,945 261,998 233,178 38,688 38,688 43,618 (11,270) (41,323) $ millions Net Sales Marketable securities Long-term debt Treasury stock (deducted from equity) Cash generated by operations Cash used for investing Cash used for financing Total net change in cash Cash at beginning of period Cash at end of period (8,975) 38,663 $29,688

We obtain the following 2020 forecasts of selected financial statement line items for Journey Company. 2019 Actual 2020 Est. $535,667 $559,772 50,725 46,945 261,998 233,178 38,688 38,688 43,618 (11,270) (41,323) $ millions Net Sales Marketable securities Long-term debt Treasury stock (deducted from equity) Cash generated by operations Cash used for investing Cash used for financing Total net change in cash Cash at beginning of period Cash at end of period (8,975) 38,663 $29,688

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Adjust the Cash Balance We obtain the following 2020 forecasts of selected financial statement line items for Journey Company. 2019 Actual 2020 Est. $535,667 $559,772 50,725 46,945 261,998 233,178 38,688 38,688 43,618 (11,270) (41,323) $ millions Net Sales Marketable securities Long-term debt Treasury stock (deducted from equity) Cash generated by operations Cash used for investing Cash used for financing Total net change in cash Cash at beginning of period Cash at end of period Note: Complete the entire question in Excel using the following template: Excel Template. Format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. a. Does forecasted cash deviate from the normal level for this company? Calculate the company's normal cash level as a percentage of sales. Normal cash as a % of sales 0% $ Using the answer above, compute what should be the normal cash balance for FY2020. Normal cash balance for FY2020 0 b. Is the deviation in part a large enough to require adjustment? Explain. (8,975) 38,663 $29,688 c. Identify three ways to adjust the forecasted cash balance. Which option would least likely be used to adjust the cash balance? Sell marketable securities Decrease capital expenditures Increase long-term debt Sell treasury stock Cash used for financing nt of cash flows assuming long-term debt is used to adjust the forecasted cash balance. 0 0 0
Transcribed Image Text:Adjust the Cash Balance We obtain the following 2020 forecasts of selected financial statement line items for Journey Company. 2019 Actual 2020 Est. $535,667 $559,772 50,725 46,945 261,998 233,178 38,688 38,688 43,618 (11,270) (41,323) $ millions Net Sales Marketable securities Long-term debt Treasury stock (deducted from equity) Cash generated by operations Cash used for investing Cash used for financing Total net change in cash Cash at beginning of period Cash at end of period Note: Complete the entire question in Excel using the following template: Excel Template. Format each answer to two decimal places. Then enter the answers into the provided spaces below with two decimal places. a. Does forecasted cash deviate from the normal level for this company? Calculate the company's normal cash level as a percentage of sales. Normal cash as a % of sales 0% $ Using the answer above, compute what should be the normal cash balance for FY2020. Normal cash balance for FY2020 0 b. Is the deviation in part a large enough to require adjustment? Explain. (8,975) 38,663 $29,688 c. Identify three ways to adjust the forecasted cash balance. Which option would least likely be used to adjust the cash balance? Sell marketable securities Decrease capital expenditures Increase long-term debt Sell treasury stock Cash used for financing nt of cash flows assuming long-term debt is used to adjust the forecasted cash balance. 0 0 0
d. Complete the following statement of cash flows assuming long-term debt is used to adjust the forecasted cash balance. Statement of Cash Flows Cash generated by operations $ Cash used for investing Cash used for financing Total change in cash Cash at beginning of period Cash at end of period $ 0 $ OO 0 0 0 O O 0 0 e. Complete the following statement of cash flows assuming marketable securities are used to adjust the forecasted cash balance. Statement of Cash Flows Cash generated by operations $ Cash used for investing Cash used for financing Total change in cash Cash at beginning of period Cash at end of period 0 0 0 0 0 0 Please answer all parts of the question.
Transcribed Image Text:d. Complete the following statement of cash flows assuming long-term debt is used to adjust the forecasted cash balance. Statement of Cash Flows Cash generated by operations $ Cash used for investing Cash used for financing Total change in cash Cash at beginning of period Cash at end of period $ 0 $ OO 0 0 0 O O 0 0 e. Complete the following statement of cash flows assuming marketable securities are used to adjust the forecasted cash balance. Statement of Cash Flows Cash generated by operations $ Cash used for investing Cash used for financing Total change in cash Cash at beginning of period Cash at end of period 0 0 0 0 0 0 Please answer all parts of the question.
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