Question

December 31 Assets Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total 2022 $ 38,500 22,000 30,800 66,000 (35,200 ) $122,100 2021 $ 22,000 15,400 22,000 85,800 (26,400) $118,800 $ 16,500 8.800 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings $ 20,900 7,700 18.700 19.800 36,300 15,400 S5,000 $122.100 $118,30 $266,200 192.500 73,700 Marigold Conany Income Statement For the Year Ended December 31, 2022 Sales revenue Cost of goods sold Gross profit Selling expenses $19,800 Administrative expenses 6.600 Income from operations Interest expense Income before income taxes Income tax expense 26,400 47,300 300 44.000 8.800 Net income $ 35,200 Additional data: 1. Depreciation expense was 519,250 2. Dividends declared and paid were $22,000. 3. During the year equipment was sold for 59,350 cash. This equipment cost $19,800 originally and had accumulated depreciation of $10,450 at the time of sale.

Answer 1

Hi

Let me know in case you face any issue:

Solution: a) Format and Naming convention of items in drop down is not available, can be slightly different: Cash flow Statement - Indirect Method Particulars Amount ($) Cash flow from Operating Activities: Net Income $ 35,200 Adjustments to reconcile net income to Net cash provided by operating acitivities: Depreciation Expense $ 19,250 Increase in Accounts Receivable $ -6,600 Increase in inventory $ -8,800 Increase in Accounts Payable $4,400 Decrease in Income Tax payable $ -1,100 $ 7,150 Net Cash Provided by Operating Activities (A) $ 42,350 Cash flow from Investing Activities: Sale of equipment $ 9,350 Cash flow from Financing Activities: Issuance of common stock Payment of dividends Redemption of Bonds Net Cash used by Financing Activities -C) $ 4,400 $-22,000 $-17,600 $ -35,200 Net Increase in cash (A+B+C) Cash at beginning of year Cash at end of year $ $ $ 16,500 22,000 38,500 b) Free Cash flow: Cash provided by operating activities - Capital expenditures - Dividends (42350 - 0 - 22000) = $ 20,350