1. Nash's Trading Post, LLC reported a net loss of $11100 for the year ended December...

1. Nash's Trading Post, LLC reported a net loss of $11100 for the year ended December 31, 2022. During the year, accounts receivable decreased $5550, inventory increased $8880, accounts payable increased by $11100, and depreciation expense of $6660 was recorded. During 2022, operating activities

a. provided net cash of $7770.

b. used net cash of $7770.

c. provided net cash of $3330.

d. used net cash of $3330.

2. If $912000 of bonds are issued during the year but $1900000 of old bonds are retired during the year, the statement of cash flows will show a(n)

a. increase in cash of $912000 and a decrease in cash of $1900000.

b. net increase in cash of $988000.

c. net loss on retirement of bonds of $988000.

d. net decrease in cash of $912000.

3. All of the following statements about free cash flow are false except

a. free cash flow is most commonly calculated by subtracting capital expenditures from cash provided by operations and then adding cash dividends.

b. free cash flow is not reported on the statement of cash flows.

c. significant free cash flow indicates less potential to pay additional dividends.

d. significant free cash flow indicates less potential to finance new investments.

Solutions

Expert Solution

Answer-1)- During 2022, operating activities = provided net cash of $3330.

Explanation-

NASH'S TRADING POST,LLC
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER, 2022

Particulars		Amount
		$
Cash flow from operating activities
Net Loss		-11100
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects

Depreciation expenses		6660

Change in operating assets & liabilities

Decrease in accounts receivable		5550
Increase in inventories		-8880
Increase in accounts payable		11100

Net cash flow from operating activities		3330

Answer-2)- If $912000 of bonds are issued during the year but $1900000 of old bonds are retired during the year, the statement of cash flows will show = increase in cash of $912000 and a decrease in cash of $1900000 (Option a).

Answer-3)- All of the following statements about free cash flow are false except= Free cash flow is not reported on the statement of cash flows. (Option b).

ekkarill92 answered 7 months ago

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