Sunland Company’s comparative balance sheets are presented below. Sunland Company Comparative Balance Sheets December 31 2019...

Sunland Company’s comparative balance sheets are presented below.

Sunland Company Comparative Balance Sheets December 31
	2019		2018
Cash	$ 15,000		$ 10,200
Accounts receivable	21,400		23,800
Land	19,800		26,400
Buildings	70,100		70,100
Accumulated depreciation—buildings	(15,300	)	(10,800	)
Total	$111,000		$119,700

Accounts payable	$ 12,800		$ 27,800
Common stock	74,600		73,400
Retained earnings	23,600		18,500
Total	$111,000		$119,700

Additional information:

1.		Net income was $22,800. Dividends declared and paid were $17,700.
2.		No noncash investing and financing activities occurred during 2019.
3.		The land was sold for cash of $4,500.

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

Compute free cash flow.

Solutions

Expert Solution

Statement of Cash Flows
For the Year Ended December 31, 2019
Cash Flows from Operating Activities:
Net income		22800
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense	4500
Loss on sale of Land	2100		=(26400-19800)-4500
Decrease in Accounts receivable	2400
Decrease in accounts payable	-15000
		-6000
Net cash provided by operating activities		16800
Cash Flows from Investing Activities:
Sale of Land		4500
Cash Flows from Financing Activities
Payment of Cash Dividends	-17700
Issuance of Common Stock	1200
Net Cash Used by Financing Activities		-16500
Net Increase in Cash		4800
Cash at Beginning of Period		10200
Cash at End of Period		15000

Net cash provided by operating activities	16800
Payment of Cash Dividends	-17700
Free cash flow	-900

ekkarill92 answered 1 year ago

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