A. Prepare a statement of cash flows using the indirect method. (Show amounts th

Question

A. Prepare a statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

B.

Problem 13-7A (Part Level Submission) The following are the financial statements of Nosker Company. NOSKER COMPANY Comparative Balance Sheets December 31 2017 2016 Assets Cash Accounts receivable Inventory Equipment Accumulated depreciation-equipment $ 34,350$19,600 18,600 20,750 77,800 32,600 26,350 59,250 (29,700) (23,400) Total $122,850$113,350 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earning:s $ 28,150 $16,850 8,350 33,950 13,850 40,350 $122,850 $113,350 7,050 27,700 17,200 42,750 Total NOSKER COMPANY Income Statement For the Year Ended December 31, 2017 Sales revenue Cost of goods sold Gross profit Operating expenses Income from operations Interest expense Income before income taxes Income tax expense Net income $241,900 175,950 65,950 24,000 41,950 3,300 38,650 8,450 $ 30,200

Explanation / Answer

b) Free cash flow refers to that amount of cash which is available for financing activties. It is equal to cash from operating activities less capital expenditure.

Free Cash Flow = Cash Flow from Operations - Capital Expenditure

= $37,800 - $0 = $37,800

Therefore free cash flow is $37,800.

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