Question
Here are comparative balance sheets for Migitsu Company. Prepare a statement of cash flowsindirect method. MIGITSU COMPANY Comparative Balance Sheets December 31 Assets 2017 2016
Here are comparative balance sheets for Migitsu Company. Prepare a statement of cash flowsindirect method.
MIGITSU COMPANY
Comparative Balance Sheets
December 31
Assets 20172016
Cash $73,000$22,000
Accounts receivable 87,00076,000
Inventories170,000191,000
Land72,000100,000
Equipment260,000200,000
Accumulated depreciation(66,000)(32,000)
Total $596,000 $557,000
Liabilities and Stockholders' Equity
Accounts payable $37,000 $47,000
Bonds payable 150,000210,000
Common stock ($1 par) 216,000 174,000
Retained earnings193,000126,000
Total $ 596,000 $ 557,000
Additional information:
1. Net income for 2017 was $100,000.
2. Cash dividends of $33,000 were declared and paid.
3. Bonds payable amounting to $60,000 were redeemed for cash $60,000.
4. Common stock was issued for $42,000 cash.
5. Equipment that cost $50,000 and had a book value of $30,000 was sold for $36,000 during 2017; land was sold at cost.
Instructions
(a) Prepare a statement of cash flows for 2017 using the indirect method.
(b) Compute free cash flow for 2017.
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