Exercise 12-6 Prepare a Statement of Cash Flows; Free Cash Flow [LO12-1, LO12-2,

Question

Exercise 12-6 Prepare a Statement of Cash Flows; Free Cash Flow [LO12-1, LO12-2, LO12-3]

Comparative financial statement data for Carmono Company follow:

This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year.

Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cash outflows as negative amounts. Round your intermediate calculations and final answers to 2 decimal places.)

Compute Carmono’s free cash flow for this year. (Negative amount should be indicated by a minus sign. Round your intermediate calculations and final answer to 2 decimal places.)

Comparative financial statement data for Carmono Company follow:

Explanation / Answer

Answer - 1

Statement of cash flows for this year

Answer - 2

Answer - 1

Statement of cash flows for this year

Cash Flows from Operating Activities Net Income        20.00 Add Expenses Not Requiring Cash:     Depreciation        11.40 Other Adjustments:     Subtract Increase in Accounts Receivable         -7.00 Add increase in Accounts Payable          9.50     Subtract Increase in Inventory       -13.30 Net Cash from Operating Activities        20.60 Cash Flows from Investing Activities Purchase of New Equipment       -37.00 Net Cash Used for Investing Activities       -37.00 Cash Flows from Financing Activities Issue of common stock        27.00 Dividend       -17.10 Note: Net income - increase in reserve during the year i.e. (20-2.9) Net Cash from Financing Activities          9.90 NET INCREASE/(DECREASE) IN CASH         -6.50 CASH, BEGINNING OF YEAR        14.00 CASH, END OF YEAR          7.50

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