Exercise 11-47 (Algorithmic) Preparing the Statement of Cash Flows The comparative balance sheets for Beckwith Products Company are presented below. 2019 2018 Assets: $ 36,950 75, 100 45,300 $ 25,000 78,000 36,000 153,000 20,000 $ 272,000 256,400 38,650 $ 375,100 Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation Total assets Llabilities and Equity: Accounts payable Interest payable Wages payable Notes payable Common stock Retained earings Total liabilities and equity $ 13,100 11,500 $ 11,000 8,000 8,100 9,000 105,400 87,200 90,000 50,000 104,000 $ 272,000 149,800 $375,100 Additional Information: 1. Net Income for 2019 was $58,400. 2. Cash dividends of $12,600 were declared and paid during 2019 3. During 2019, Beckwith issued $50,000 of notes payable and repaid $35,000 principal relating to notes payable 4. Common stock was issued for $37,200 cash. 5. Depreciation expense was $19,050, and there were no disposals of equipment. Required: 1. Prepare a statement or cash flows (indirect method) for Beckwith Products for 2019. Use a minus sign to indicate any decreases in cash or cash outfiows Beckwith Products Company Statement of Cash Flows For the Year Ended December 31, 2019 Cash flows from operating activities: Net Income 58.400 Adjustments to reconcile net income to net cash flow from operating activities: Cash flows from operating activities: Net Income 58,400 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense 19,650 X 2,900 9,300 X 2,100 3,500 900 X 17,950 X Decrease in accounts receivable Increase in Inventory Increase in accounts payable Increase in Interest payable v Decrease in wages payable Net cash provided by operating activities Cash flows from investing activities: Equipment purchase Net cash used for investing activities Cash flows from financing activities: Cash received from Issuance notes 76,350 X 1,034,000 X 1,034,000 X 50,000 Repayment of long-term liabilities 35,000 X Cash received from stock issue 19.800X 43,800 X 39,000 X Payment of dividends Net cash provided by financing activities Net change in cash v Cash, 1/1/2019 Cash, 12/31/2019 11,950 25,000 36,950 Feedback Check My Work 1 Use proper form with company name, statement title, and date. Complete three sections for cash flows, operating investing and financing For operating activities, start with net income and consider any noncash items as well as gains or losses. Next, analyze the changes in the balance sheet accounts to determine their oflect on cash (Remember to restate the fundamental accounting equation in terms of changes, separate the cash and noncash assets and isolate the change in cash) Finally, total to determine the net cash flow for operating assets For investing activities, analyze the balance sheet changes and additional information for items that may be assified as an investing activity Make T-accounts for any changes and determine it there was an associated intow or outflow of cash for each account affected For financing activibes analyze the balance sheet changes and additional information for items that may be classified as a financing activity Make accounts for any changes and determine if there was an associated into or outflow of cash for each account afected 2. Compute the following cash-based performance measures: a. Free cash flow D. Cash flow adequacy (Note: Assume that the average amount of debt maturing over the next 5 years is $85,000). Use two decimal places for the adequacy ratio. Enter negative values as negative numbers Free cash flow 27,050 x Adequacy ratio 0.48 X
