Question

Apex Company prepared the statement of cash flows for the current year that is shown below Apex Company Statement of Cash Flows-Indirect Method Operating activities: Net income Adjustments to convert net income to cash basis: s 40, 600 Depreciation Increase in accounts receivable Increase in inventory Decrease in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable $ 21,700 (61,200) (25,100) 10,800 53,200 (11,600) 3,600 (8,600) Net cash provided by (used in) operating activities 32,000 Investing activities: Proceeds from the sale of equipment Loan to Thomas Company Additions to plant and equipment Net cash provided by (used in) investing activities Financing activities: Increase in bonds payable Increase in common stock Cash dividends Net cash provided by (used in) financing activities Net decrease in cash and cash equivalents 15,500 (41,400) 120,600 (146,500) 88,100 38,100 30,000) 96,200 (18,300) 1 of 2l Next> earch

Answer 1

Free cash flows are prapared to measure the ability of the company to spend on capital expenditures like purchase of capital assets (buildings, equipment,property) and dividends from cash provided by operating activities.

Formula for Free cash flow = Net cash provided by operating activities - capital expenditures - dividend

Therefore,

        particulars                                                   Amount($)

Net cash procided by operating activities                 32,000

Less:

( - ) Additions to plant and equipment                       (120,600)

( - ) Dividend paid                                                    (30,000 )

Free cash flows                                                      $118,600