1. For each of the events listed below, select the category that best describes its effect on a statement of cash flows. Your categories are as follows:

a.Cash provided/used by operating activities

b.Cash provided/used by investing activities

c.Cash provided/used by financing activities

d.Not a cash flow item

Events:

_____ 1. Payment on long-term debt

_____ 2. Issuance of bonds at a premium

_____ 3. Collection of accounts receivable

_____ 4. Cash dividends declared

_____ 5. Issuance of shares to acquire land

_____ 6. Sale of marketable securities (long-term)

_____ 7. Payment of employees' wages

_____ 8. Issuance of common shares for cash

_____ 9. Payment of income taxes payable

_____ 10. Purchase of equipment

_____ 11. Purchase of treasury stock (common)

_____ 12. Sale of real estate held as a long-term investment

2.Financial statements for Space Galaxy Ltd. are presented below:

Space Galaxy Ltd.

Statement of Financial Position

December 31, 2020

AssetsLiabilities & Shareholders' Equity

Cash$44,000Accounts payable$28,000

Accounts receivable39,000Bonds payable54,000

Buildings and equipment154,000

Accumulated depreciation

buildings and equipment(46,000)Common shares69,000

Patents24,000Retained earnings64,000

$215,000$215,000

Space Galaxy Ltd.

Statement of Cash Flows

For the Year Ended December 31, 2020

Cash flows from operating activities

Net income$60,000

Adjustments to reconcile net income to net cash

provided by operating activities:

Increase in accounts receivable$(19,000)

Increase in accounts payable7,000

Depreciationbuildings and equipment12,000

Gain on sale of equipment(7,000)

Amortization of patents3,000(4,000)

Net cash provided by operating activities56,000

Cash flows from investing activities

Sale of equipment14,000

Purchase of land(27,000)

Purchase of buildings and equipment(52,000)

Net cash used by investing activities(65,000)

Cash flows from financing activities

Payment of cash dividend(25,000)

Sale of bonds45,000

Net cash provided by financing activities20,000

Net increase in cash11,000

Cash, January 1, 202033,000

Cash, December 31, 2020$44,000

At the beginning of 2020, the accounts payable balance was $21,000, and the bonds payable balance was $9,000. All of Space Galaxy's bonds have been issued at par.

Question

1.Calculate the current cash debt coverage ratio

2.Calculate the cash debt coverage ratio

3.Calculate the free cash flow

The records of Groot Corp. for calendar 2020 reflected the following correct pre-tax amounts:

Gain from discontinued operations, $50,000;

Cash dividends declared and paid, $45,000;

Retained earnings, January 1, 2020, $275,000,

Correction of accounting error, $35,000 debit;

Income before income taxes and before discontinued operations, $165,000.

The average income tax rate of 40% applies to all items except the dividends.

Question

1.Calculate the December 31, 2020 ending balance of retained earnings.