Question

Teal Beverage Company reported the following items in the most recent year. Net income Dividends paid Increase in accounts receivable Increase in accounts payable Purchase of equipment (capital expenditure) Depreciation expense Issue of notes payable $40,800 5,760 13,850 8,860 9,110 5,860 24,860 Compute net cash provided by operating activities, the net change in cash during the year. (Show amounts that decrease cash flow with either a-sign e.g. - 15,000 or in parenthesis e.g. (15,000).) TEAL BEVERAGE COMPANY Statement of Cash Flows Adjustments to reconcile net income to

Answer 1

TEAL BEVERAGE COMPANY
Statement of Cash Flows
I. Cash flow from Operating Activities
Net Income		40,800
Adjustments to reconcile net income to
Net cash provided by Operating Activities
Depreciation expense	5,860
Increase in accounts payable	8,860
Increase in accounts receivable	-13,850
		870
Net cash provided by Operating Activities		41,670
II.  Cash flow from Investing Activities
Purchase of equipment	-9,110
Net cash used in Investing Activities		-9,110
III. Cash flow from Financing Activities
Issue of notes payable	24,860
Dividends paid	-5,760
Net cash provided by Financing Activities		19,100
Net increase in Cash and Cash Equivalents(I +II +III)		51,660

Free cash flow = Net cash provided by operating activities - capital expenditures - Dividends paid

= 41,670-9,110-5,760

= $26,800

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