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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 3 years ago
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