Comparative financial statement data for Carmono Company follow. This Year Last Year $ 3 5 6…
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Question “Comparative financial statement data for Carmono Company follow. This Year Last Year $ 3 5 6…”
Comparative financial statement data for Carmono Company follow. This Year Last Year $ 3 5 6 24 200 Assets Cash Accounts receivable Inventory Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Total assets Liabilities and Stockholders’ Equity Accounts payable Common stock Retained earnings Total liabilities and stockholders’ equity 150 $ 220 $ 36 $250 $ 2 For this year, the company reported net income as follows: Sales Cost of goods sold Gross margin Selling and administrative expenses Net income $ 275 150 125 9e 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. Required: 1. Using the indirect method, prepare a statement of cash flows for this year. 2. Compute Carmono’s free cash flow for this year.
Using the indirect method, prepare a statement of cash flows for this year. (List any deduction in cash and cas negative amounts.) Carmono Company Statement of Cash Flows For This Year Ended December 31 Operating activities: Investiqz activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents Required 1 Required 2 >
FUI UHD year, UIE LUIRPORT TEPUIEU TIEL HILURITE OD TUHUV. $ 275 150 Sales Cost of goods sold Gross margin Selling and administrative expenses Net income $ 35 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. Required: 1. Using the Indirect method, prepare a statement of cash flows for this year. 2. Compute Carmono’s free cash flow for this year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute Carmono’s free cash flow for this year. (Negative amount should be indicated by a minus sign.) Free cash flow < Required 1 Required 2
Answer
1.
Carmono Company Statement on Cash Flows This year’s December 31st | ||
Operating Activities | ||
Net Income | $ 35 | |
Adjustments to reconcile net earnings to net cash received by operations | ||
Depreciation expense | $ 15 | |
Account receivables decrease | 2 | |
Stock increase | (10) | |
Accounts payable increase | 4 | 11 |
Operational net cash | 46 | |
Investing Activities | ||
Equipment purchased with cash | (40) | |
Net cash is used to invest in activities | (40) | |
Financing Activities | ||
Cash from the issuance of common stock | 5 | |
Cash paid for dividends | (14) | |
Use net cash for financing activities | (9) | |
Increase (decrease) net cash | (3) | |
Cash balance for the last year | 6 | |
This year, cash balance | 3 |
2. Free cash flow = Net cash from operations – net cash for investing activities = $ 46-$ 40 = $ 6
Conclusion
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