Presented below is a condensed version of the comparative balance sheets for Son
ID: 2376392 • Letter: P
Question
Presented below is a condensed version of the comparative balance sheets for Sondergaard Corporation for the last two years at December 31.
Additional information:
Investments were sold at a loss (not extraordinary) of $11,389; no equipment was sold; cash dividends paid were $81,350; and net income was $260,320.
(a) Prepare a statement of cash flows for 2012 for Sondergaard Corporation. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
b) Determine Sondergaard Corporation%u2019s free cash flow.
2012 2011 Cash $255,439 $126,906 Accounts receivable 292,860 300,995 Investments 84,604 120,398 Equipment 484,846 390,480 Less: Accumulated depreciation%u2014equipment (172,462 ) (144,803 ) Current liabilities 218,018 245,677 Capital stock 260,320 260,320 Retained earnings 466,949 287,979Explanation / Answer
(a).
Cash Flows from Operating Activities
Income 260,320
Net cash provided by operating activities
Depreciation expense (172,462 -144,803) 27,659
Loss on sale of investments 11,389
Decrease in A/C receivable (300,995 -292,860) 8135
Decrease in current liabilities (245,667 -218,018) (27,659)
19,524
Net cash provided by operating activities 279,844
Cash flows from investing activities
Sales of investments [ (120,398 -84,604) -11,389] 24,405
Purchase of equipment (484,846 -390,480) (94,366)
Net cash used by investing activities (69,961)
Cash flow from financing activities
Payment of cash dividends 81,350
Net increase in cash 128,533
Cash at beginning of year 126,906
Cash at end of year 255,439
(b). Net cash provided by operating activities 279,844
Less: Purchase of equipment (94,366)
Dividends (81,350)
Free cash flow 104,128
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