Question

*Problem 12-07A Presented below are the financial statements of Sunland Company Sunland Company Comparative Balance Sheets December 31 Assets 2022 Cash $ 56,000 Accounts receivable 32,000 Inventory 44,800 Property, plant, and equipment 96,000 Accumulated depreciation (51,200 ) Total $177,600 2021 $ 32,000 22,400 32,000 124,800 (38,400) $172,800 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total $ 30,400 11,200 27,200 28,800 80,000 $177,600 $ 24,000 12,800 52,800 22,400 60,800 $172,800 $387,200 280,000 107,200 Sunland Company Income Statement For the Year Ended December 31, 2022 Sales revenue Cost of goods sold Gross profit Selling expenses $28,800 Administrative expenses 9,600 Income from operations Interest expense Income before income taxes Income tax expense 38,400 68,800 4,800 64,000 12,800 $ 51,200 Net income Additional data: 1. Depreciation expense was $28,000. 2. Dividends declared and paid were $32,000. 3. During the year equipment was sold for $13,600 cash. This equipment cost $28,800 originally and had accumulated depreciation of $15,200 at the time of sale.

Answer 1

Statement of Cash Flows
For the Year Ended December 31, 2022
Cash Flows from Operating Activities:
Net income		51200
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	28000
Increase in Accounts Receivable	-9600
Increase in inventory	-12800
Increase in accounts payable	6400
Decrease in Income taxes payable	-1600
		10400
Net cash provided by operating activities		61600
Cash Flows from Investing Activities:
Sale of Equipment		13600
Cash Flows from Financing Activities
Payment of Dividends	-32000
Redemption of Bonds	-25600
Issuance of Common Stock	6400
Net Cash Used by Financing Activities		-51200
Net Increase in Cash		24000
Cash at Beginning of Period		32000
Cash at End of Period		56000
2
Net cash provided by operating activities	61600
Payment of Dividends	-32000
Free cash flow	29600