This question is from chapter 14 of Managerial Accounting 16 th edition by Ray G

Question

This question is from chapter 14 of Managerial Accounting 16th edition by Ray Garrison.

Exercise 14-6 Prepare a Statement of Cash Flows; Free Cash Flow [L014-1, LO14-2, LO14-3] Comparative financial statement data for Carmono Company follow: This Year Last Year Assets Cash Accounts receivable Inventory Total current assets Property, plant, and equipment $ 6.00 44.00 85.00 135.00 222.00 43.20 178.80 $313.80 $ 11.00 37.00 71.40 119.40 188.00 32.40 155.60 $275.00 Less accumulated depreciation Net property, plant, and equipment Total assets Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $ 51.00 106.00 156.80 $313.80 $ 43.00 82.00 150.00 $275.00 Total liabilities and stockholders' equity For this year, the company reported net income as follows Sales Cost of goods sold Gross margin Selling and administrative expenses Net income $700.00 420.00 280.00 260.00 $ 20.00 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.

Explanation / Answer

Cash flow from operating activities net income for the year 20 adjustments to reconcile net income depreciation 10.8 increase in accounts receivable -7 increase in inventory -13.6 increase in accounts payable 8 cash provided by operating activities 18.2 Cash flow from investing activities purchase of PP&E -34 cash used by investing activities -34 cash flow from financing activity cash from issuance of common stock 24 cash dividend paid -13.2 Cash used by financing activity 10.8 net decrease in cash -5 cash at the beginning of the year 11 cash at year end 6 Free cash flow cash from operating activities - capital expenditure - cash dividend 18.2-34-13.2 -29 answer

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