Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Apex Company prepared the statement of cash flows for the current year that is shown below: Apex Company Statement of Cash FlowsIndirect Method Operating activities:

Apex Company prepared the statement of cash flows for the current year that is shown below:

Apex Company Statement of Cash FlowsIndirect Method
Operating activities:
Net income $ 41,200
Adjustments to convert net income to cash basis:
Depreciation $ 20,400
Increase in accounts receivable (62,000)
Increase in inventory (25,200)
Decrease in prepaid expenses 9,900
Increase in accounts payable 54,000
Decrease in accrued liabilities (11,000)
Increase in income taxes payable 3,300 (10,600)
Net cash provided by operating activities 30,600
Investing activities:
Proceeds from the sale of equipment 15,400
Loan to Thomas Company (40,000)
Additions to plant and equipment (121,100)
Net cash used for investing activities (145,700)
Financing activities:
Increase in bonds payable 89,100
Increase in common stock 39,800
Cash dividends (28,900)
Net cash provided by financing activities 100,000
Net decrease in cash (15,100)
Beginning cash balance 27,900
Ending cash balance $ 12,800

Required:

Compute Apex Companys free cash flow for the current year. (Negative amount should be indicated by a minus sign.)

4. Comparative financial statement data for Carmono Company follow:

This Year Last Year
Assets
Cash $ 16.00 $ 31.00
Accounts receivable 84.00 77.00
Inventory 135.00 123.40

Total current assets 235.00 231.40

Property, plant, and equipment 282.00 228.00
Less accumulated depreciation 59.20 44.40

Net property, plant, and equipment 222.80 183.60

Total assets $ 457.80 $ 415.00

Liabilities and Stockholders Equity
Accounts payable $ 81.00 $ 63.00
Common stock 186.00 142.00
Retained earnings 190.80 210.00

Total liabilities and stockholders equity $ 457.80 $ 415.00

For this year, the company reported net income as follows:

Sales $ 1,700.00
Cost of goods sold 1,020.00

Gross margin 680.00
Selling and administrative expenses 660.00

Net income $ 20.00

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Required:
4a.

Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts. Round your intermediate calculations and final answers to 2 decimal places.)

4b.

Compute Carmonos free cash flow for this year. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to 2 decimal places.)

5. The following changes took place last year in Pavolik Companys balance sheet accounts:

Asset and Contra-Asset Accounts Liabilities and Equity Accounts
Cash $ 7 D Accounts payable $ 23 I
Accounts receivable $ 11 I Accrued liabilities $ 11 D
Inventory $ 32 D Income taxes payable $ 16 I
Prepaid expenses $ 6 I Bonds payable $ 100 I
Long-term investments $ 8 D Common stock $ 44 D
Property, plant, and equipment $ 200 I Retained earnings $ 43 I
Accumulated depreciation $ 43 I
D = Decrease; I = Increase.

Long-term investments that had cost the company $8 were sold during the year for $20, and land that had cost $19 was sold for $11. In addition, the company declared and paid $5 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock.

The companys income statement for the year follows:

Sales $ 630
Cost of goods sold 264
Gross margin 366
Selling and administrative expenses 290
Net operating income 76
Nonoperating items:
Loss on sale of land $ (8)
Gain on sale of investment 12 4
Income before taxes 80
Income taxes 32
Net income $ 48

The companys beginning cash balance was $102 and its ending balance was $95.

Required:
1.

Using the indirect method, determine the net cash provided by / used in operating activities for the year.(List any deduction in cash and cash outflows as negative amounts.)

2.

Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Cases An Interactive Learning Approach

Authors: Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt

3rd Edition

0131494910, 9780131494916

More Books

Students also viewed these Accounting questions

Question

Solve the equation using both the ado -5y-3=1-4y

Answered: 1 week ago

Question

Explain how you would reduce stress at work.

Answered: 1 week ago