Comparative financial statement data for Carmono Company follow: This year Carmo

Question

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.

Carmono CompanyStatement of Cash Flows - Indirect MethodFor This Year Ended December 31Operating activities:Net income$20.00Adjustments to convert net income to a cash basis:Depreciation$11.40Increase in accounts receivable(7.00)Increase in inventory(13.30)Increase in accounts payable9.500.60Net cash provided by operating activities20.60Investing activities:Increase in plant and equipment(37.00)Net cash used in investing activities(37.00)Financing activities:Increase in common stock27.00Cash dividends(17.10)Net cash provided by financing activities9.90Net decrease in cash(6.50)Beginning cash and cash equivalents14.00Ending cash and cash equivalents$7.50

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.)

Free cash flow$

3.

Changes in various accounts and gains and losses on the sale of assets during the year for Argon Company are given below:

For each item, indicate whether the dollar amount should be added to or deducted from net income under the indirect method when computing the net cash provided by operating activities for the year.

4.

Apex Company prepared the statement of cash flows for the current year that is shown below:

Compute Apex Company’s free cash flow for the current year. (Negative amount should be indicated by a minus sign.)

Free Cash Flow

5.

For the just completed year, Hanna Company had net income of $95,000. Balances in the company’s current asset and current liability accounts at the beginning and end of the year were as follows:

December 31

  

The Accumulated Depreciation account had total credits of $42,000 during the year. Hanna Company did not record any gains or losses during the year.

Use the indirect method to determine the net cash provided by (or used in) operating activities for the year. (List any deduction in cash and cash outflows as negative amounts.)

Comparative financial statement data for Carmono Company follow:

Explanation / Answer

1.

Carmono Company Cash Flow Statement For year ended 31 December Cash flows from operating activities Net Income $   20.00 Adjustment to reconcile net income to: Depreciation expense $   11.40 $45.6-$34.2 Changes in current operating assets and liabilities Increase in accounts receivable $   (7.00) Increase in inventory $ (13.30) Increase in accounts payable $      9.50 $      0.60 Net cash provided by operating activities $   20.60 Cash flows from investing activities Purchase of equipment $ (37.00) Net cash used by investing activities $ (37.00) Cash flows from financing activities Dividend paid $ (17.10) $161.9-$159-$20 Proceeds from issue of common stock $   27.00 Net cash used by financing activities $      9.90 Net increase in cash and cash equivalents $   (6.50) Cash and cash equivalents at beginning of period $   14.00 Cash and cash equivalents at end of period $      7.50

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