Question

P17.7A (LO 2, 3) Financial Statement The following are the financial statements of Nosker Company. Nosker Company Comparative Balance Sheets December 31 Assets 2020 Cash $ 38,000 Accounts receivable 30,000 Inventory 27,000 Equipment 60.000 Accumulated depreciation equipment (29,000) Total $126,000 Liabilities and Stockholders' Equity Accounts payable $ 24,000 Income taxes payable 7,000 Bonds payable 27,000 Common stock 18,000 Retained earnings 50,000 Total $126.000 2019 $ 20,000 14.000 20,000 78,000 (24.000) $108,000 $ 15,000 8,000 33.000 14.000 38.000 $108,000 Nosker Company Income Statement For the Year Ended December 31, 2020 Sales revenue $242,000 Cost of goods sold 175.000 Gross profit 67,000 Operating expenses 24.000 Income from operations 43,000 Interest expense 3.000 Income before income taxes 40.000 Income tax expense 8.000 Net income $ 32,000 Additional data: 1. Dividends declared and paid were $20,000. 2. During the year, equipment was sold for $8.500 cash. This equipment cost $18,000 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, S14,500, is in the operating expenses. 4. All sales and purchases are on account.

Answer 1

$ 32,000 Nosker Company Statement of Cash Flows For the Year Ended December 31, 2020 Cash flows from operating activities Net Income Adjustment to reconcile net income to net cash provided by operating activities Depreciation expense 14,500 Increase in accounts receivable (14,000-30,000) (16,000) Increase in Inventory (20,000 - 27,000) (7,000) Increase in Accounts payable (24,000 - 15,000) 9,000 Decrease in Income tax payable (7,000 - 8,000) (1,000) 500 Net Cash provided by operating activities 31,500 Cash flows from investing activities Sale of Equipment 8,500 (20,000) (6,000) 4,000 Cash flows from financing activities Payment of dividends Redemption of bonds (27,000 - 33,000) Issuance of common stock (18,000 - 14,000) Net Cash used by investing activities Net Increase in Cash Cash at Beginning of period Cash at End of period (22,000) 18,000 20,000 38,000 $

Free Cash flow $ 11,500 31,500 Cash flow from operating activities Less: Capital expenditure Less: Dividends payment Free Cash flow (20,000) 11,500