Question

Problem 5-7 Bramble Inc. had the following balance sheet at December 31, 2019. Cash Accounts receivable Investments Plant assets (net) Land BRAMBLE INC. BALANCE SHEET DECEMBER 31, 2019 $ 22,390 Accounts payable 23,590 Bonds payable 32,000 Common stock 83,390 Retained earnings 42,390 $203,760 $ 32,390 43,390 102,390 25,590 $203,760 During 2020, the following occurred. 1. 2. 3. 4. 5. 6. 7. Bramble liquidated its available-for-sale debt investment portfolio at a loss of $7,390. A tract of land was purchased for $40,390. An additional $30,000 in common stock was issued at par. Dividends totaling $12,390 were declared and paid to stockholders. Net income for 2020 was $37,390, including $14,390 in depreciation expense. Land was purchased through the issuance of $32,390 in additional bonds. At December 31, 2020, Cash was $72,590, Accounts Receivable was $44,390, and Accounts Payable was $42,390.

Answer 1

Free cash flow= Net cash provided by operating activities - Capital Expenditure - Dividends = $48,370 - $40.390 - $12,390 = $4,410 $37,390 BRAMBLE INC. Statement of Cash Flows For year ended December 31, 2020 Cash flows from operating activities Net Income Adjust to reconcile net income to Net cash provided by operating activities & change in working capital Depreciation Expenses Loss on sale of debt investment Increase in Accounts receivable Increase in Accounts payable Current cash debt coverage = Net cash Provided by operating activities / Average current liabilities = $48,370 / ($32.390 + $42,390)/2 = $48,370 / $37,390 = 1.29:1 $14,390 $7,390 -$20.800 $10.000 $10.980 $48,3701 Net cash Provided by operating activities Cash flows from investing activities Sale of debt Investment Purchase of Land Net cash Provided by investing activities $24,610 -$40,390 -$15.780 Cash flows from financing activities Issued of common stock Payment of Dividends Net cash Provided by financing activities $30,000 -$12,390 $17.610 Net cash procced Add: beginning cash and cash equivalent Ending cash and cash equivalent NonCash Investing and Financing Activites Land purchased through issuance of $32,390 of bond $50.200 $22,390 $72,590 BRAMBLE INC. Balance Sheet Devember 31,2020 Assets Cash Accounts receivable Plant assets (net) ($83,390 - $14,390) Land ($42.390 + $40,390 + $32,390) Total Assets Liabilities and Stockholders' Equity Accounts Payable Bonds Payable ($43,390 + $32,390) Common Stock ($102,390 + $30,000) Retained Earnings ($25,590 + $37.390 - $12.390) Total Liabilities and Stockholders' Equity $72,590 $44.390 $69.000 $115.170 S301,150 $42,390 $75.780 $132.390 $50,590 $301,150