Question

*Problem 17-07A (Video) The following are the financial statements of Nosker Company. NOSKER COMPANY Comparative Balance Sheets December 31 Assets 2020 Cash $35,550 Accounts receivable 32,300 Inventory 26,000 Equipment 59,500 Accumulated depreciation-equipment (29,250) Total $124,100 2019 $20,750 19,250 20,100 77,200 (23,600) $113,700 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total $28,700 7,050 27,700 17,750 42,900 $ 124,100 $ 16,050 8,350 32,300 14,150 42,850 $113,700 NOSKER COMPANY Income Statement For the Year Ended December 31, 2020 Sales revenue Cost of goods sold Gross profit Operating expenses Income from operations Interest expense Income before income taxes Income tax expense Net income $241,500 175,650 65,850 24,250 41,600 3,450 38,150 9,000 $29,150 Additional data: 1. Dividends declared and paid were $29,100. 2. During the year, equipment was sold for $8,500 cash. This equipment cost $17,700 originally and had a book value of $8,500 at the time of sale. 3. All depreciation expense, $14,850, is in the operating expenses. 4. All sales and purchases are on account. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease

Answer 1

29150 NOSKER COMPANY Statement of Cash Flows For the Year Ended December 31, 2020 Cash flows from Operating Activities Net Income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense 14850 Increase in accounts receivable -13050 Increase in inventory -5900 Increase in accounts payable 12650 Decrease in income taxes payable -1300 Net cash flow from Operating Activities Cash flows from Investing Activities Proceed from sale of equipment Cash flows from Financing Activities Repayment of bonds payable - 4600 Issuance of common stock 3600 Dividends paid -29100 Net Cash flow used for Financing Activities Net increase in cash Cash balance at beginng of year Cash balance at end of year 7250 36400 8500 -30100 14800 20750 35550 Free cash flow = Net cash flow from operating activities - Cash dividend paid Free cash flow = $36,400 - $29,100 Free cash flow = $7,300