You have been provided with a 2019 income statement and 2018 and 2019 balance sheets for Wenwen, Inc.

In addition:

• In 2019, Wenwen paid $5,000 of preferred stock dividends
• In 2019, Wenwen also paid common stock dividends

Your assignment is to:

• Prepare a 2019 cash flow statement for Wenwen, Inc. in proper GAAP format.
• Prepare a free cash flow calculation for 2019 and reconcile the free cash flow total to the total change in cash from the GAAP income statement.

Income Statement 2019 210,000 Revenue Cost of Revenue Gross Profit 110,000 100,000 R&D Sales & Marketing G&A Total Operating Expenses 15,000 35,000 7,000 57,000 EBIT Interest Expense EBT Taxes Net Income 43,000 7,000 36,000 9,000 27,000 Wenwen, Inc. Balance Sheet 2018 Cash Short-term marketable securities Accounts receivable Inventory Prepaid Insurance Prepaid Rent Total current assets 5,000 10,000 36,000 11,000 5,000 7,000 74,000 2019 8,000 18,000 31,000 15,000 4,000 9,000 85,000 Accounts payable Accrued wages and taxes Short-term debt Interest Payable Deferred revenue -short-term Total current liabilities Wenwen, Inc. Balance Sheet 2018 2019 9,000 13,000 11,000 9,000 6,000 10,000 3,000 16,000 20,000 42,000 55,000 Deferred revenue - long-term Long-term debt Total Liabilities 11,000 19,000 72,000 8,000 7,000 70,000 Gross plant and equipment Accumulated Depreciation Net plant and equipment Gross intangible assets Accumulated Amortization Net intangible assets Long term marketable securities Total Assets 33,000 36,000 (8,000) (11,000) 25,000 25,000 14,000 16,000 (2,000) (4,000) 12,000 12,000 7,000 5,000 118,000 127,000 Common Stock & APIC Preferred Stock Treasury stock Retained earnings Total Equity Total Liabilities & equity 5,000 5,000 8,000 8,000 (11,000) (17,000) 44,000 61,000 46,000 57,000 118,000 127,000