Question

The comparative balance sheets for Beckwith Products Company are presented below.

Beckwith Products

Comparative Balance Sheets

For the Years Ended December 31, 2018 and 2019

1		2019	2018
2	Assets:
3	Cash	$36,950.00	$25,000.00
4	Accounts receivable	75,100.00	78,000.00
5	Inventory	45,300.00	36,000.00
6	Property, plant, and equipment	256,400.00	153,000.00
7	Accumulated depreciation	38,650.00	20,000.00
8	Total assets	$375,100.00	$272,000.00
9	Liabilities and equity:
10	Accounts payable	$13,100.00	$11,000.00
11	Interest payable	11,500.00	8,000.00
12	Wages payable	8,100.00	9,000.00
13	Notes payable	105,000.00	90,000.00
14	Common stock	100,000.00	50,000.00
15	Retained earnings	137,400.00	104,000.00
16	Total liabilities and equity	$375,100.00	$272,000.00

Additional Information:

1.	Net income for 2019 was $58,400.
2.	Cash dividends of $25,000 were declared and paid during 2019.
3.	During 2019, Beckwith issued $50,000 of notes payable and repaid $35,000 principal relating to notes payable.
4.	Common stock was issued for $50,000 cash.
5.	Depreciation expense was $18,650, and there were no disposals of equipment.

	Required:
1.	Prepare a statement of cash flows (indirect method) for Beckwith Products for 2019.
2.	Compute the following cash-based performance measures: (a) free cash flow and (b) cash flow adequacy. (Note: Assume that the average amount of debt maturing over the next 5 years is $85,000.

Labels and Amount Descriptions

Labels
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
December 31, 2019
For the year ended December 31, 2019
Amount Descriptions
Cash, 1/1/2019
Cash, 12/31/2019
Cash received from issuance of notes
Cash received from stock issue
Depreciation expense
Decrease in accounts receivable
Decrease in inventory
Decrease in wages payable
Equipment purchase
Increase in accounts payable
Increase in accounts receivable
Increase in inventory
Increase in interest payable
Increase in wages payable
Net cash provided by financing activities
Net cash used for financing activities
Net cash provided by investing activities
Net cash used for investing activities
Net cash provided by operating activities
Net cash used for operating activities
Net decrease in cash
Net increase in cash
Net income
Net loss
Payment of dividends
Repayment of long-term liabilities

Answer 1

Answer:-1)-

Beckwith Products
Statement of Cash Flow (Using Indirect Method)
For the year ended DECEMBER 31,2019
Particulars		Amount
		$
Cash flow from opreating activities
Net Income		58400
Adjustments to reconcile net income to net cash provided by opreating activities
Adjustment for non cash effects
Depreciation		18650
Change in opreating assets & liabilities
Decrease in accounts receiveble		2900
Increase in inventory		-9300
Increase in accounts payable		2100
Increase in interest payable		3500
Decrease in wages payable		-900
Net cash flow from opreating activities (a)		75350
Cash Flow from Financing activities
Cash Dividend paid		-25000
Notes payable issued		15000
Common stock issued		50000
Net cash Flow from Financing activities (b)		40000
Cash Flow from Investing activities
Purchase of equipment		-103400
Net cash Flow from Investing activities (c)		-103400
Net Channge in cash c=a+b+c		11950
Beginning cash balance		25000
Closing cash balance		36950

2)-

Calculation of Free cash flow:-

Net cash flow provided by operating activities=                      $75350

Less:-Capital Expenditures                                                     -$103400

Less:-Dividends                                                                       -$25000

Free cash flow                                                                          -$53050