SHOW CALCULATIONS AND FORMULAS for problem OR NO CREDIT GIVEN CF Industries Comp
ID: 2540126 • Letter: S
Question
SHOW CALCULATIONS AND FORMULAS for problem OR NO CREDIT GIVEN
CF Industries Company Comparative Balance Sheet Dec. 31, 2015 Dec. 31, 2014 Assets Cash Accounts receivable Prepaid expenses Inventory 61,000 5,000 2,000 11,000 0 20,000 (3,000 $12,000 8,000 3,000 7,000 0 20,000 (2,000 an Building Accumulated depreciation-Bldg Total assets $96,000 $48,000 Liabilities and Stockholders' Equit Accounts payable Income Tax Pavable Bonds payable Common stock Retained earnings $ 1,700 300 13,000 38,000 43,000 s 3,200 800 14,000 18,000 12,000 tal liabilities and 3t ckholders' equity $96,000 $48,000 The income statement for CF Industries contains the following information: $143,500 2,500 Sales revenue 1,033 on 3a1e Cost of goods sold 78,000 Operating expenses 10,000 Depreciation expense 1,000 Income tax expense Net Income 2,000 50,000 Additional information: 1. Cash dividends of $19,000 were declared and paid during the year 2. Land costing $20,000 was acquired by issuing common stock. 3. The land in #2 was later sold f r $17,500 cash.Explanation / Answer
a. Cash Flow statement is as prepared below:
Working:
c. Free cash flow
Free Cash Flow is the amount of cash that remains after deducting funds required for
current or continuing operations, interest, income taxes, dividends, and net capital
expenditures (purchase of plant assets - sale of plant assets).
So free cash flow here is:
Net cash flow from operating activities 51,500
Less: dividend paid 19,000
Add: Sale of land 17,500
Free cash flow is $50,000
CF Industries Company Statement of Cash Flows For the Year Ended December 31,2015 Cash Flows From Operating Activities Net Income (Given) 50,000 Adjustments to reconcile net income to Net Cash Provided by Operating Activities Depreciation Expense 1,000 Loss on sale 2,500 Decrease in Accounts Recievable (8,000-5,000) 3,000 Decrease in prepaid expenses (3,000-2,000) 1,000 Increase in inventory (7,000-11,000) -4,000 Decrease in accounts payable (3,200-1,700) -1,500 Decrease in income tax payable (800-300) -500 1,500 Net Cash Provided by Operating Activities 51,500 Cash Flows From Investing Activities Sale of land 17,500 Net Cash Provided by Investing Activities 17,500 Cash Flows From Financing Activites Bonds Redeemed -1,000 Payments of Cash Dividends -19,000 Net Cash Used by Financing Activities -20,000 Net Increase in Cash 49,000 Cash at Beginning of the Year 12,000 Cash at end of Year 61,000 Non Cash activities: Land acquired by issuing Common Stock $20,000Related Questions
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