The comparative balance sheets for Beckwith Products Company are presented below

Question

The comparative balance sheets for Beckwith Products Company are presented below. Additional Information: Net income for 2011 was $58,400. 2. Cash dividends of $25,000 were declared and paid during 2011. 3. During 2011, Beckwith issued 550,000 of notes payable and repaid $35,000 principal relating to notes payable. 4. Common stock was issued for $50,000 cash. 5. Depreciation expense was $18,650, and there were no disposals of equipment. Required: 1. Prepare a statement of cash flows (indirect method) for Beckwith Products for 2011. 2. Compute the following cash-based performance measures: (a) free cash flow, and (b) cash flow adequacy. 3. What can you conclude by examining the patterns in Beckwith's cash flows?

Explanation / Answer

Answer:1

Beckwith Products Company Statement of cash flow For the year ended 2011 Particulars Amount Cash Flow from operating activities: Net income 58400 Adjustment Dep expense 18650 Dec in accounts receivable 2900 Inc in inventory -9300 Increase in accounts payable 2100 Increase in interest payable 3500 Decrease in wages payable -900 Net cash flow provided by operating activities 75350 Cash Flow from investing activities: Purchase of PPE -103400 Net cash used in investing activities -103400 Cash Flow from financing activities: Issue of common stock 50000 Dividend paid -25000 Issue of notes payable 15000 Net cash provided by financing activities 40000 Total cash flow from all activities 11950 Opening cash 25000 Closing cash 36950

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