Exercise 11-47 (Algorithmic) Preparing the Statement of Cash Flows

The comparative balance sheets for Beckwith Products Company are presented below.

	2019		2018
Assets:
Cash	$ 36,950		$ 25,000
Accounts receivable	75,100		78,000
Inventory	45,300		36,000
Property, plant, and equipment	256,400		153,000
Accumulated depreciation	38,650		20,000
Total assets	$ 375,100		$ 272,000
Liabilities and Equity:
Accounts payable	$ 13,100		$ 11,000
Interest payable	11,500		8,000
Wages payable	8,100		9,000
Notes payable	105,400		90,000
Common stock	88,500		50,000
Retained earnings	148,500		104,000
Total liabilities and equity	$375,100		$ 272,000

Additional Information:

Net income for 2019 was $58,400.

Cash dividends of $13,900 were declared and paid during 2019.

During 2019, Beckwith issued $50,000 of notes payable and repaid $35,000 principal relating to notes payable.

Common stock was issued for $38,500 cash.

Depreciation expense was $19,050, and there were no disposals of equipment.

Required:

Question Content Area

1. Prepare a statement of cash flows (indirect method) for Beckwith Products for 2019. Use a minus sign to indicate any decreases in cash or cash outflows.

Beckwith Products Company Statement of Cash Flows For the Year Ended December 31, 2019

Cash flows from operating activities:
Cash received from short-term notesCash received from stock issueNet change in cashNet incomePayment of dividendsRepayment of long-term liabilities		$- Select -
Adjustments to reconcile net income to net cash flow from operating activities:
Cash received from short-term notesCash received from stock issueDepreciation expenseNet change in cashNet incomePayment of dividendsRepayment of long-term liabilities	$- Select -
Cash received from short-term notesCash received from stock issueDecrease in accounts receivableNet change in cashNet incomePayment of dividendsRepayment of long-term liabilities	- Select -
Cash received from short-term notesCash received from stock issueIncrease in inventoryNet incomePayment of dividendsRepayment of long-term liabilities	- Select -
Cash received from short-term notesCash received from stock issueIncrease in accounts payableNet incomePayment of dividendsRepayment of long-term liabilities	- Select -
Cash received from short-term notesCash received from stock issueIncrease in interest payableNet incomePayment of dividendsRepayment of long-term liabilities	- Select -
Cash received from short-term notesCash received from stock issueDecrease in interest payableDecrease in inventoryDecrease in wages payableRepayment of long-term liabilities	- Select -	- Select -
Net cash provided by operating activities			$fill in the blank 997c8f074fb5fd5_16
Cash flows from investing activities:
Decrease in accounts receivableDecrease in wages payableDepreciation expenseEquipment purchaseEquipment saleIncrease in accounts payable		$- Select -
Net cash used for investing activities			fill in the blank 997c8f074fb5fd5_19
Cash flows from financing activities:
Cash received from issuance notesDecrease in wages payableDepreciation expenseIncrease in accounts payableIncrease in interest payableIncrease in inventoryNet income		$- Select -
Decrease in accounts receivableDecrease in wages payableDepreciation expenseIncrease in accounts payableIncrease in interest payableIncrease in inventoryRepayment of long-term liabilities		- Select -
Cash received from stock issueDecrease in wages payableDepreciation expenseIncrease in accounts payableIncrease in interest payableIncrease in inventoryNet income		- Select -
Decrease in accounts receivableDecrease in wages payableDepreciation expenseIncrease in accounts payableIncrease in interest payableIncrease in inventoryNet incomePayment of dividends		- Select -
Net cash provided by financing activities			fill in the blank 997c8f074fb5fd5_28
Decrease in wages payableDepreciation expenseIncrease in accounts payableNet change in cashNet income			$- Select -
Cash, 1/1/2019			fill in the blank 997c8f074fb5fd5_31
Cash, 12/31/2019			$fill in the blank 997c8f074fb5fd5_32

Question Content Area

2. Compute the following cash-based performance measures:

a. Free cash flow

b. 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
Adequacy ratio