Statement of Cash Flows Problem Mr. Miranda, President of Hamilton Inc., is concerned that the amount of cash available at the end of of cash flows for the year, compute the free cash flow for the year, and prepare an explanation to Mr. Miranda for the reason in the decline in the company's cash balance. the year is $13,000 less than the previous year, especially since the company reported a rather large net Other Information: 1. The company declared and paid a cash dividend 2. Equipment with an original cost of $20,000 and accumulated depreciation of $10,000 was sold for $8,000. 3. Long-term investments with a cost of $20,000 were sold for $30,000. 4. The company did not retire any bonds or repurchase any common stock during the year. Comparative Balance Sheet at July 31 This Year Last Year $ 21,000 80,000 90,000 9.000 Income Statement For This Year Ended Jay 31 Assets Current assets: Cash and cash equivalents Accounts recolvable Inventory. Prepaid expenses Total current assets Long-term investments Plant and equipment Less accumulated depreciation Net plant and equipment Total assets 200 000 Sales $ 8.000 120,000 140,000 5,000 273,000 50,000 430,000 50,000 370,000 5693,000 $500,000 300.000 200,000 158 OOC 42.000 $10,000 12.000) 70.000 Cost of goods sold 300,000 Gross margin... 50,000 Selling and administrative expenses 250.000 Net operating income Nonoperating tems $520,000 Gain on sale of Investments Loss on sale of equipment Income before txos Income taxes $ 60,000 17.000 Net Income 12.000 89.000 0 29000 8.000 50.000 20,000 $ 30,000 Liabilities and Stockholders' Equity Current liabilities Accounts payable Accrued liabilities Income taxes payable Total current abilities Bonds payable Total abilities Stockholders' equity: Common stock Retained earnings Total stockholders' equity Total abilities and stockholders' equity $123,000 8,000 20.000 151.000 70.000 221.000 366.000 106.000 472.000 $693.000 346.000 85.000 431000 5520,000