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CH 12 Homework

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Blue Spruce Corp.’s comparative balance sheets are presented below:

Blue Spruce Corp. Comparative Balance Sheets December 31
		2019			2018
Cash		$ 16,600			$ 17,700
Accounts receivable		25,400			22,000
Investments		19,850			15,750
Equipment		59,750			70,050
Accumulated depreciation—equipment		(14,250	)		(10,100	)
Total		$107,350			$115,400
Accounts payable		$ 14,450			$ 11,050
Bonds payable		10,600			30,100
Common stock		50,300			45,100
Retained earnings		32,000			29,150
Total		$107,350			$115,400

Additional information:

1.		Net income was $18,450. Dividends declared and paid were $15,600.
2.		Equipment which cost $10,300 and had accumulated depreciation of $1,900 was sold for $3,500.
3.		No noncash investing and financing activities occurred during 2019.

Prepare a statement of cash flows for 2019 using the indirect method.

Compute free cash flow

Answer 1

Answer-

BLUE SPRUCE COMPANY
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31,2019
Particulars		Amount
		$
Cash flow from operating activities
Net Income		18450
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		6050
Loss on sale of equipment		4900
Change in operating assets & liabilities
Increase in accounts receivable		-3400
Increase in accounts payable		3400
Net cash flow from operating activities (a)		29400
Cash Flow from Investing activities
Cash paid for investments		-4100
Cash received from sale of equipment		3500
Net cash flow (used for) Investing activities (b)		-600
Cash Flow from Financing activities
Cash paid to bonds payable		-19500
Cash received from issue of common stock		5200
Cash paid for dividends		-15600
Net cash flow (used for) Financing activities (c)		-29900
Net Change in cash c=a+b+c		-1100
Cash at the beginning of the year		17700
Cash at the end of the year		16600