Payment of cash dividends

$15,200

Depreciation expense

$16,600

Purchase of equipment with cash

54,600

Purchase of building with cash

108,000

Issuance of long-term notes payable to borrow cash

47,000

Net income

63,600

Issuance of common stock for cash

110,000

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	2024	2023
Current Assets:
Cash	$85,700	$22,500
Accounts Receivable	14,800	21,200
Merchandise Inventory	62,800	59,800
Current Liabilities:
Accounts Payable	30,600	29,100
Accrued Liabilities	10,500	11,600

Requirement 1. Prepare the statement of cash flows of Morgensen Educational Supply for the year ended December 31, 2024.

Use the indirect method to report cash flows from operating activities. (Use a minus sign or parentheses for amounts that result in a decrease in cash. If a box is not used in the statement, leave the box empty; do not select a label or enter a zero.)

Complete the statement one section at a time, beginning with the cash flows from operating activities.

	Morgensen Educational Supply
	Statement of Cash Flows
	Year Ended December 31, 2024
	Cash Flows from Operating Activities:
	Net Income
	Adjustments to Reconcile Net Income to Net Cash
	Provided by (Used for) Operating Activities:
	Net Cash Provided by (Used for) Operating Activities

	Cash Flows from Investing Activities:
	Net Cash Provided by (Used for) Investing Activities

	Cash Flows from Financing Activities:
	Net Cash Provided by (Used for) Financing Activities

	Net Increase (Decrease) in Cash
	Cash Balance, December 31, 2023
	Cash Balance, December 31, 2024

Requirement 2. Evaluate Morgensen's cash flows for the year. Mention all three categories of cash flows, and give the reason for your evaluation.

Complete the following statements to evaluate Morgensen's cash flows. Operations are

generating

using up

cash.

The company is

divesting itself of

investing in new

plant assets.

There is more financing by

borrowing

issuing stock

than by

borrowing.

issuing stock.

Cash

decreased

increased

during the year.

For the reasons given above,

Morgensen's

cash flows look

strong

weak

.

Requirement 3. If Morgensen plans similar activity for 2025,

what is its expected free cash flow? (Use a minus sign or parentheses for amounts that result in a decrease in cash. Abbreviations used: Cash pmts for planned invest. = Cash payments for planned investments in long-term assets; NCOA = Net cash provided by operating activities; NCFA = Net cash provided by financing activities.)

Select the labels and enter the amounts to calculate Morgensen's expected free cash flow for 2025.

	-		-		=	Free cash flow
	-		-		=