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Rodriquez Corporation’s comparative balance sheets are presented below: RODRIQUEZ CORPORATION Comparative Balance Sheets December 31 2020...

Rodriquez Corporation’s comparative balance sheets are presented below:

RODRIQUEZ CORPORATION
Comparative Balance Sheets
December 31

2020

2019
Cash

$16,600

$17,700
Accounts receivable

25,400

22,500
Investments

20,150

15,850
Equipment

60,050

70,150
Accumulated depreciation—equipment

(14,150

)

(10,500

)
   Total

$108,050

$115,700
Accounts payable

$14,450

$11,050
Bonds payable

10,800

30,200
Common stock

50,000

44,800
Retained earnings

32,800

29,650
   Total

$108,050

$115,700


Additional information:

1. Net income was $18,750. Dividends declared and paid were $15,600.
2. Equipment which cost $10,100 and had accumulated depreciation of $1,900 was sold for $3,700.
3. No noncash investing and financing activities occurred during 2020.

1)Prepare a statement of cash flows for 2020 using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000, or in parenthesis e.g. (15,000).)

2)Compute free cash flow. (Enter negative amount using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

Free cash flow

$

Solutions

Expert Solution

Statement of Cash Flows
For the Year Ended December 31, 2020
Cash Flows from Operating Activities:
Net income 18750
Adjustments to reconcile net income to
Net cash provided by operating activities
Depreciation expense 5550
Loss on disposal of Equipment 4500
Increase in Accounts Receivable -2900
Increase in accounts payable 3400
10550
Net cash provided by operating activities 29300
Cash Flows from Investing Activities:
Sale of Equipment 3700
Purchase of investment -4300
Net Cash used by Investing Activities -600
Cash Flows from Financing Activities
Payment of Dividends -15600
Redemption of Bonds -19400
Issuance of Common Stock 5200
Net Cash Used by Financing Activities -29800
Net Decrease in Cash -1100
Cash at Beginning of Period 17700
Cash at End of Period 16600
2
Net cash provided by operating activities 29300
Less : Payment of Dividends -15600
Free cash flow 13700

ekkarill92 answered 1 year ago
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