Chapter 14: Q14-14RQ (page 769)
Question: What is free cash flow, and how is it calculated?
Answer
Free cash flow is the cashavailable with the company for new opportunities.
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Preparing the direct method statement of cash flows Use the data in Short Exercise S14A-12 and your results. Prepare the business’s complete statement of cash flows for the year ended June 30, 2018, using the direct method for operating activities.
Preparing operating activities using the direct method Amy’s Learning Center has assembled the following data for the year ended June 30, 2018:
Payments to suppliers $ 115,000
Cash payment for purchase of equipment 39,000
Payments to employees 66,000
Payment of notes payable 34,000
Payment of dividends 7,500
Cash receipt from issuance of stock 22,000
Collections from customers 188,000
Cash receipt from sale of land 58,000
Cash balance, June 30, 2017 41,000 Prepare the operating activities section of the business’s statement of cash flows for the year ended June 30, 2018, using the direct method.
Preparing operating activities using the direct method Amy’s Learning Center has assembled the following data for the year ended June 30, 2018:
Payments to suppliers $ 115,000
Cash payment for purchase of equipment 39,000
Payments to employees 66,000
Payment of notes payable 34,000
Payment of dividends 7,500
Cash receipt from issuance of stock 22,000
Collections from customers 188,000
Cash receipt from sale of land 58,000
Cash balance, June 30, 2017 41,000 Prepare the operating activities section of the business’s statement of cash flows for the year ended June 30, 2018, using the direct method.
Question: Computing cash flow items—direct method Consider the following facts:
Requirements
Preparing the direct method statement of cash flows Red Toy Company reported the following comparative balance sheet:
Requirements
1. Compute the collections from customers during 2018 for Red Toy Company. Sales Revenue totaled \(134,000.
2. Compute the payments for inventory during 2018. Cost of Goods Sold was \)79,000.
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