Foxboro Company\'s income statement for Year 2 follows Foxboro Company $707,000

Question

Foxboro Company's income statement for Year 2 follows Foxboro Company $707,000 170,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Gain on sale of equipment Income before taxes Income taxes Net income 537.000 218,000 319,000 8,000 327,000 130,800 $196200 Its balance sheet amounts at the end of Years 1 and 2 are as follows Foxboro Company Balance Sheet Year 2 Year 1 Assets Cash Accounts receivable Inventory Prepaid expenses s 138.200 $ 50,200 256,000 147,000 19,000 280,000 10,500 21,000 Total current assets 723,700 498 200 639,000 506,000 165,500 131900 Plant and equipment Net plant and equipment Loan to Harker Company Total assets 473,500 374.100 40,000 $1,237 200 $872,300 Liabilities and Stockholders equity Accounts payable Accrued liabilities S 316,000 $253,000 6,000 51,000 Income taxes payable 85,800 80,300 Total current liabilities Bonds payable 447 800 384,300 197,000 117,000 644,800 501,300 331,000 274,000 Total iabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 261,400 97,000 592 400 371,000 $1 237 200 $872.300

Explanation / Answer

net cash provided by operating activities 158,000 Statement of cash flow operating activities net income 196,200 Adjustments to convert net income to cash basis Depreciation expense 43,800 gain on sale of Equipment -8,000 increase in account receivable -109000 increase in inventory -39000 decrease in prepaid expense 10500 increase in accounts payable 63000 Decrease in accrued liabilities -5000 increase in income taxes payable 5500 -38,200 net cash provided by operating activities 158,000 investing activities cash from sale of land 29,500 loan to harker company -40,000 purchase of equipment -164,700 net cash used by investing activities -175,200 Financing activities cash from bonds payable 80000 cash dividends -31,800 cash from stock issue 57000 cash provided by financing activities 105,200 net increase in cash 88,000 cash at the beginning of the year 50,200 cash at year end 138,200 Free cash flow cash from operating activities 158,000 less capital expenditure -164,700         dividends -31,800 Free cash flow -38,500 answer Working notes Accumulated dep closing balance 165500 opening minus dep on sold equipment 121700 Deprecaition expense for the year 43800 purchase of Equipment closing balance 639,000 opening - cost of Equipment sold 474300 purchase of Equipment 164,700 retained earnings opening + net income 293200 closing 261400 Dividend paid 31800

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