Question
The income statement and additional data of Jackson Services, Inc. follow: Jackson Services, Inc. Income Statement Year Ended December 31, 2013 Revenues: Sales Revenue $304,000
The income statement and additional data of Jackson Services, Inc. follow:
Jackson Services, Inc. Income Statement Year Ended December 31, 2013 | ||
Revenues: | ||
Sales Revenue | $304,000 | |
Dividend Revenue | 7,000 | |
Total Revenues | $311,000 | |
Expenses: | ||
Cost of Goods Sold | $100,000 | |
Salaries Expense | 55,000 | |
Depreciation Expense | 20,000 | |
Advertising Expense | 9,000 | |
Interest Expense | 1,000 | |
Income Tax Expense | 13,000 | |
Total Expenses | 198,000 | |
Net Income | $113,000 |
Additional data follows:
Acquisition of fixed assets totaled $122,000. Of this amount, $105,000 was paid in cash and a $17,000 note payable was signed for the remainder.
Proceeds from sale of land totaled $28,000. No gain or loss was recognized on the sale.
Proceeds from issuance of common stock totaled $34,000.
Payment of long-term note payable was $17,000.
Payment of dividends was $11,000.
Data from the comparative balance sheet follow:
December 31 | 2012 | 2011 |
Current Assets: | ||
Cash | $89,000 | $24,000 |
Accounts Receivable | 45,000 | 62,000 |
Inventory | 34,000 | 28,000 |
Current Liabilities: | ||
Accounts Payable | $33,000 | $26,000 |
Accrued Liabilities | 11,000 | 26,000 |
Requirements:
Part A: Prepare Jackson Services statement of cash flows for the year ended September 30, 2013, using the indirect method.
Part B: Calculate Jackson Services free cash flow for the year ended September 30, 2013.
Part C: Evaluate Jackson Services cash flows for the year. In your evaluation, mention all three categories of cash flows as well as free cash flow and give the reason for your evaluation.
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