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Chapter 14: Q3TI (page 752)

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?

Short Answer

Expert verified

Answer

Free cash flow expected by Kalapono is $78,000.

Step by step solution

01

Cash flow from operating activities 

The planned investment in long-term assets is deducted from the net cash provided by operating activities. Here, net cash used for investing activities will be deducted from the cash provided by operating activities.

02

Calculation of free cash flow Kalapono expect for 2018

Particulars

Amount($)

Net cash provided by operating activities

100,000

Cash payments planned for investments in long-term assets

(20,000)

Cash dividends

(2,000)

Free cash flow

78,000

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Most popular questions from this chapter

Question: How does the direct method differ from the indirect method when preparing the operating activities section of the statement of cash flows?

Use the Rouse Exercise Equipment data in Exercises E14-23 and E14-24. Rouse plans to purchase a truck for \(23,000 and a forklift for \)125,000 next year. In addition, it plans to pay cash dividends of $3,500. Assuming Rouse plans similar activity for 2019, what would be the amount of free cash flow?

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 the statement of cash flows—direct method Use the Rolling Hills, Inc. data from Problem P14-34A. Requirements

1. Prepare the 2018 statement of cash flows by the direct method.

2. How will what you learned in this problem help you evaluate an investment?


Question: Computing cash flows for investing and financing activities Consider the following facts for Java Jolt:

  1. Beginning and ending Retained Earnings are \(45,000 and \)70,000, respectively. Net income for the period is \(60,000.
  2. Beginning and ending Plant Assets are \)124,500 and \(134,500, respectively.
  3. Beginning and ending Accumulated Depreciation—Plant Assets are \)21,500 and \(26,500, respectively.
  4. Depreciation Expense for the period is \)17,000, and acquisitions of new plant assets total \(29,000. Plant assets were sold at a \)5,000 gain. Requirements
  5. How much are cash dividends?
  6. What was the amount of the cash receipt from the sale of plant assets?
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