2. For the just completed year, Hanna Company had net income of $74,500. Balance

Question

2. For the just completed year, Hanna Company had net income of $74,500. 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.)

3. 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.)

4. 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.)

4b. 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.)

  

  

      Long-term investments that had cost the company $8 were sold during the year for $20, and land that had cost $19 was sold for $11. In addition, the company declared and paid $5 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock.

  

   

  

  

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

   

Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.)

   

December 31

End of Year Beginning of Year   Current assets:      Cash $ 60,000 $ 82,000           Accounts receivable $ 152,000 $ 188,000           Inventory $ 439,000 $ 346,000           Prepaid expenses $ 12,000 $ 14,500        Current liabilities:      Accounts payable $ 362,000 $ 392,000           Accrued liabilities $ 7,500 $ 12,500           Income taxes payable $ 35,000 $ 27,000     

Explanation / Answer

(2)

NOTE: First question is answered.

STATEMENT OF OPERATING CASH FLOWS $ Net Income 74,500 Add: Depreciation 42,000 Add: Decrease in current assets    Accounts receivables 36,000    Prepaid expenses 2,500 Add: Increase in current liabilities    Income tax payable 8,000 Less: Increase in current assets    Inventory -93,000 Less: Decrease in current liabilities    Accounts payable -30,000    Accrued liabilities -5,000 NET CASH FLOW FROM OPERATIONS 35,000

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