Prepare statement of cash flows—indirect method (Learning Objective 3)

20–25 min.

The income statement and additional data of Snyder Services, Inc., follow:

Snyder Services, Inc.

Income Statement Year Ended November 30, 2014 Revenues:

Sales Revenue Dividend Revenue Total Revenues Expenses:

Cost of Goods Sold Salaries Expense Depreciation Expense Advertising Expense Interest Expense Income Tax Expense Total Expenses Net Income

$286,000 193,000

$ 93,000

$275,000 11,000

$103,000 45,000 19,000 7,000 7,000 12,000 Additional data follows:

a. Acquisition of fixed assets totaled $102,000. Of this amount, $87,000 was paid in cash and a $15,000 note payable was signed for the remainder.

b. Proceeds from the sale of land totaled $19,000. No gain or loss was recognized on the sale.

c. Proceeds from issuance of common stock total $50,000.

d. Payment of long-term note payable was $15,000.

e. Payment of dividends was $16,000.

f. Data from the comparative balance sheet follow:
Current Assets:
Cash....................................................................................................
Accounts Receivable ...........................................................................
Inventory.............................................................................................
Current Liabilities:
Accounts Payable................................................................................
Accrued Liabilities...............................................................................
$11,000 55,000 24,000 $27,000 25,000 $71,000 40,000 38,000 $36,000 12,000 November 30 2014 2013 Requirements 1. Prepare Snyder Services’ statement of cash flows for the year ended November 30, 2014, using the indirect method.
2. Calculate Snyder Services free cash flow for the year ended November 30, 2014.
3. Evaluate Snyder Services’ cash flows for the year. In your evaluation, mention all three categories of cash flows as well as free cash flow and give the reason for your evaluation.AppendixLO1