S11-13. (Learning Objectives 4, 5, 6, 7: Preparing and analyzing a statement of cash flows—direct method) Horse Heaven Farm began 20X6 with cash of $180,000. During the year, Horse Heaven earned service revenue of $600,000 and collected $480,000 from customers.

Expenses for the year totaled $330,000, with $300,000 paid in cash to suppliers and employees. Horse Heaven also paid $138,000 to purchase equipment and a cash dividend of

$47,000 to shareholders. During 20X6, Horse Heaven borrowed $25,000 by issuing a note payable. Prepare the company’s statement of cash flows for the year. Format operating activities by the direct method. Calculate Horse’s free cash flow and cash realization ratio.

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