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 2017 2016
Cash $ 73,000 $ 22,000
Accounts receivable 87,000 76,000
Inventories 170,000 191,000
Land 72,000 100,000
Equipment 260,000 200,000
Accumulated depreciation (66,000) (32,000)
Total $ 596,000 $ 557,000
Liabilities and Stockholders Equity
Accounts payable $ 37,000 $ 47,000
Bonds payable 150,000 210,000
Common stock ($1 par) 216,000 174,000
Retained earnings 193,000 126,000
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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