50 itess: Inc its balance sheet amounts at the end of Years 1 and 2 are as follo

Question

50 itess: Inc its balance sheet amounts at the end of Years 1 and 2 are as follows: Cash $ 212,800 s 73,180 134,800 Accounts receivable 257,000 Inventory 319,000273,800 798,300 499,100 166,100 131,10a Prepaid expenses Total current assets Property, plant, and equipment 626,000 504,000 Less accumulated depreciation Net property, plant, and equipment Loan to Hymans Company Total assets Liabilities and Stockholders Equity Accounts payable 459,90840 $1,299,200 $872,000 s 311,000 $256,008 41,000 46,000 84, 398 53,800 00 389,000 Accrued liabilities Income taxes payable Total current liabilities 441,300 389,808

Explanation / Answer

2.Statement of Cash flows for Year 2 Operating Activities: Net Income as per Income statement 252600 Adjustments for non-cash items: Add: Depreciation for the year(166100+11100-131100) 46100 Less: Gain on sale of equipment -7000 Adjusted Net Income 291700 Working capital changes: Less: Increase in accounts receivables(257000-134000) -123000 Less: Increase in Inventory(319000-273000) -46000 Add: Decrease in prepaid expenses(19000-9500) 9500 Add: Increase in Accounts payable(311000-256000) 55000 Less: Decrease in accrued liabilities(53000-46000) -7000 Add: Increase in Income taxes payable(84300-80000) 4300 Net Working capital changes -107200 1..Net cash provided by Operating activities-----------a 184500 Investing ativities Purchase of PP&E(31000+626000-504000) -153000 Sale of equipment 26900 Loan to Hymans Co. -41000 Cash used in Investing ativities--------------------------b -167100 Financing Activities Issuance of Bonds(203000-108000) 95000 Issue of common stock(344000-284000) 60000 Payment of Dividend(91000+252600-310900) -32700 Cash provided by Financing Activities-------------------c 122300 Net cash provided -------------------------------------a+b+c 139700 Add: Beginning balance 73100 Ending cash balance 212800 3. Free Cash flow for Year 2: Cash flow from Operating activities-Capital expenditures 184500-153000= 31500

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