In: Accounting
Rodriquez Corporation’s comparative balance sheets are presented below.
Additional information:
1. Net income was $18,300. Dividends declared and paid were $16,400.
2. Equipment which cost $10,000 and had accumulated depreciation of $1,200 was sold for $3,300.
3. No noncash investing and financing activities occurred during 2017.
Instructions
(a) Prepare a statement of cash flows for 2017 using the indirect method.
(b) Compute free cash flow.
a.
Rodriquez Corporation
Statement of Cash Flows
For the year ended December 31, 2017 (Amounts in $)
Cash Flows from Operating Activities | ||
Net Income | 18,300 | |
Adjustments to reconcile net income cash flow from operating activities | ||
Add: Depreciation Expense ($14,000 End. Accum. Dep. Bal.+$1,200Accum. Dep. on Equipment sold- $10,000 Beg. Accum. Dep. Bal.) | 5,200 | |
Add: Loss on Sale of Equipment [($10,000 cost - $1,200 Accum. Dep.) - $3,300 Sale Price] | 5,500 | |
Less: Increase in Accounts Receivable ($25,200 - $22,300) | (2,900) | |
Add: Increase in Accounts Payable ($14,600 - $11,100) | 3,500 | |
Total of Adjustments | 11,300 | |
Net Cash provided by Operating Activities (A) | 29,600 |
b.
Cash Flows from Investing Activities | ||
Sale of Equipment | 3,300 | |
Purchase of Investments ($20,000 - $16,000) | (4,000) | |
Net Cash used in Investing Activities (B) | (700) | |
Cash Flows from Financing Activities | ||
Repayments of Bonds ($30,000 - $10,000) | (20,000) | |
Issue of Common Stock ($50,000 - $45,000) | 5,000 | |
Dividends paid | (16,400) | |
Net Cash used in Financing Activities (C) | (31,400) | |
Net Increase/(Decrease) in Cash (A+B+C) | (2,500) | |
Add: Beginning Cash Balance | 17,700 | |
Ending Cash Balance | 15,200 |
a.
Rodriquez Corporation
Statement of Cash Flows
For the year ended December 31, 2017 (Amounts in $)
Cash Flows from Operating Activities | ||
Net Income | 18,300 | |
Adjustments to reconcile net income cash flow from operating activities |