Question

cate whether the dollar amount method when computing the 1, Lo14-2, Lo14-3 Prepare an answer sheet using the following column headings: Item Amount Add Subtract For each item, place an X in the Add or Subtract column to indicate whether the should be added to or subtracted from net income under the indirect method when net cash provided by operating activities for the year. EXERCISE 14-6 Prepare a Statement of Cash Flows; Free Cash Flow LC Comparative financial statement data for Carmono Company follow: This Year Last Year Assets Cash and cash equivalents .. $ 3 $ 6 Accounts receivable 22 24 Inventory ，，，，，，，，， ，，，་，，་་་་ 50 Total current assets.，，，，，，，，，，，， Property, plant, and equipment ..... 240 Less accumulated depreciation .... 65 Net property, plant, and equipment 175 150 Total assets ... $250 $220 40 ༈ ཝ། - ༄༅། ། ། 200 50 Liabilities and Stockholders' Equity Accounts payable.. Common stock Retained earnings ........ Total liabilities and stockholders' equity ...... $ 40 150 60 $250 $ 36 145 39 $220 |

Answer 1

Solution 1:

Carmono Company
Statement of Cash Flows
For This Year
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$35.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$15.00
Decrease in accounts receivables ($24 - $22)	$2.00
Increase in inventory ($50 - $40)	-$10.00
Increase in accounts payable ($40 - $36)	$4.00
Net Cash provided by operating activities		$46.00
Cash Flow from Investing Activities:
Purchase of Property, plant and equipment	-$40.00
Net Cash Provided by Investing activities		-$40.00
Cash Flow from Financing Activities:
Proceed from issue of common stock	$5.00
Dividend paid ($39 + $35 - $60)	-$14.00
Net Cash used in financing activities		-$9.00
Net Increase / (Decrease) in Cash		-$3.00
Cash balance at beginning of year		$6.00
Cash balance at end of year		$3.00

Solution 2:

Free cash flow = Operating cash flow - Capital expenditure - Dividends

= $46 - $40 - $14 = -$8