4 Comparative financial statement data for Carmono Company follow: This Year Ass

Question

4 Comparative financial statement data for Carmono Company follow: This Year Assets Cash Accounts receivable Inventory Total current assets Property, plant, and equipment $ 5.ee 4e.0e 8e.ee 125.8e 216.ee 41.60 174.40 $ 9.0e 33.0e 66.20 188.2e 184.ee points Less accumulated depreciation Net property, plant, and equipment Total assets 31.2 152.8e $299.48 $261.ee Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings Total 1iabilities and stockholders equity $ 48.ee 98.e0 153.4e $ 41.ee 76.e0 144-8e 299.40 $261.0e For this year, the company reported net income as follows: Sales Cost of goods sold Gross margin Selling and administrative expenses Net äncome $600.ee 36e.8e 246.8e 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 Requlred 1. Using the indirect method. prepare a statement of cash flows for this year 2 Compute Carmono's free cash flow for this year. Answer is complete but not entirely correct.

Explanation / Answer

Answer 1 CARMONO Statement of Cash Flows For the Year Ended December 31 Cash Flows from Operating Activities: Net Income $20.00 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation Expense $10.40 Increase in Accounts Receivables -$7.00 Increase in Inventory -$13.80 Increase in Accounts Payable $7.00 -$3.40 Net Cash available from Operating activities $16.60 Cash Flows from Investing Activities: Purchase of Property,Plant and Equipment -$32.00 Net cash used for Investing activities -$32.00 Cash Flows from Financing Activities: Issue of Common stock $22.00 Dividend paid -$10.60 Net Cash available from Financing activities $11.40 Net Cash Surplus -$4.00 Add : Beginning Cash balance $9.00 Ending Cash balance $5.00 Dividend paid calculation Last year retained earnings balance $144.00 Add: Net Income for This Year $20.00 Less : This year retained earnings balance $153.40 Dividend Paid   $10.60 Answer 2 Carmono Free Cash flow = Net Cash available from operating activities - Purchase of Plant,Property and Equipment Carmono Free Cash flow = $16.60 - $32 = -$15.40

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