Chapter 14: Q16RQ (page 769)
Why might a spreadsheet be helpful when completing the statement of cash flows?
The spreadsheets help in the creating cash flow statement because it makes the calculation of cash flow statement from the balance sheet and profit and loss accounts easier.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
Question: Kalapono Company expects the following for 2018:
• Net cash provided by operating activities of \(100,000.
• Net cash provided by financing activities of \)10,000.
• Net cash used for investing activities of \(20,000 (no sales of long-term assets).
• Cash dividends paid to stockholders was \)2,000.
How much free cash flow does Kalapono expect for 2018?
Question: Computing investing and financing cash flows Preston Media Corporation had the following income statement and balance sheet for 2018:
PRESTON MEDIA CORPORATION
Income Statement
Year Ended December 31, 2018
Sales Revenue \(80,000
Depreciation Expense––Plant Assets \)11,000
Other Expenses \(50,000
Net Income \)19,000
Requirements
1. Compute the acquisition of plant assets for Preston Media Corporation during 2018. The business sold no plant assets during the year. Assume the company paid cash for the acquisition of plant assets.
2. Compute the payment of a long-term note payable. During the year, the business issued a $4,400 note payable.
Preparing operating activities cash flow—direct method
The accounting records of Four Seasons Parts reveal the following:
Payment of salaries and wages \( 34,000
Net income \) 21,000
Depreciation expense 10,000
Payment of income tax 16,000
Payment of interest 17,000
Collection of dividend revenue 5,000
Payment of dividends 5,000
Payment to suppliers 51,000
Collections from customers 116,000
Compute cash flows from operating activities using the direct method for the year ended December 31, 2018.
Question: What is free cash flow, and how is it calculated?
Computing operating activities cash flow—indirect method
The records of Vintage Color Engraving reveal the following:
Net income \( 36,000
Depreciation expense \) 5,000
Sales revenue 53,000
Decrease in current liabilities 19,000
Loss on sale of land 4,000
Increase in current assets other than cash 10,000
Acquisition of land 35,000
Compute cash flows from operating activities by the indirect method for year ended December 31, 2018.
What do you think about this solution?
We value your feedback to improve our textbook solutions.
