Statement of Cash Flows (Indirect Method)

The Forrester Companys income statement and comparative balance sheets as of December 31 of 2019 and 2018 are shown below:

FORRESTER COMPANY Income Statement For the Year Ended December 31, 2019
Sales Revenue		$660,000
Cost of Goods Sold	$376,000
Wages Expense	107,000
Depreciation Expense	22,000
Rent Expense	28,000
Income Tax Expense	24,000	557,000
Net Income		$103,000

FORRESTER COMPANY Balance Sheets
	Dec. 31, 2019	Dec. 31, 2018
Assets
Cash	$58,000	$30,000
Accounts Receivable	52,000	60,000
Inventory	142,000	120,000
Prepaid Rent	16,000	10,000
Plant Assets	420,000	301,000
Accumulated Depreciation	(127,000)	(105,000)
Total Assets	$561,000	$416,000
Liabilities and Stockholders Equity
Accounts Payable	$29,000	$17,000
Wages Payable	14,000	9,000
Income Tax Payable	7,000	8,000
Common Stock	295,000	252,000
Paid-in-Capital in Excess of Par Value	72,000	58,000
Retained Earnings	144,000	72,000
Total Liabilities and Stockholders Equity	$561,000	$416,000

Cash dividends of $31,000 were declared and paid during 2019. Plant assets were purchased for cash and additional common stock was issued for cash. Accounts payable relate to merchandise purchases.

Required a. Calculate the change in cash that occurred during 2019. b. Prepare a statement of cash flows using the indirect method. c. Compute free cash flow. d. Compute the operatingcashflowtocurrentliabilities ratio. e. Compute the operatingcashflowstocapitalexpenditures ratio.

a. Change in Cash during 2019? Did it increase or decrease?

b. Use a negative sign with cash outflow answers.

FORRESTER COMPANY Statement of Cash Flows For Year Ended December 31, 2019
Cash Flow from Operating Activities
Net Income						Answer
Add (deduct) items to convert net income to cash basis
Depreciation						Answer
Accounts Receivable	(increase or decrease)					Answer
Inventory	(increase or decrease)					answer
Prepaid Rent	(increase or decrease)					Answer
Accounts Payable	(increase or decrease)					Answer
Wages Payable	(increase or decrease)					Answer
Income Tax Payable	(increase or decrease)					Answer
Cash Flow Provided by Operating Activities						Answer
Cash Flow from Investing Activities
Purchase of Plant Assets						Answer
Cash Flow from Financing Activities
Issuance of Common Stock						Answer
Payment of Dividends						Answer
Cash Provided by Financing Activities						Answer
Net Change in Cash						Answer
Cash at Beginning of Year						Answer
Cash at End of Year						Answer

c. Free cash flow? d. Operating-cash-flow-to-current-liabilities ratio. Round answer to two decimal places.

e. Operating-cash-flow-to-capital-expenditures ratio. Round answer to two decimal places.