PROBLEM 14–9 Prepare a Statement of Cash Flows; Free Cash Flow [LO1, LO2, LO3]
Foxboro Company’s income statement for Year 2 follows:
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $700,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . 400,000
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . 300,000
Selling and administrative expenses . . . . . . . 216,000
Net operating income . . . . . . . . . . . . . . . . . . . 84,000
Gain on sale of equipment . . . . . . . . . . . . . . . 6,000
Income before taxes . . . . . . . . . . . . . . . . . . . . 90,000
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 27,000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,000
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
Equipment that had cost $30,000 and on which there was accumulated depreciation of $10,000
was sold during Year 2 for $26,000. The company declared and paid a cash dividend during Year 2.
It did not retire any bonds or repurchase any of its own stock.
Required:
1. Using the indirect method, compute the net cash provided by operating activities for Year 2.
2. Prepare a statement of cash flows for Year 2.
3. Compute the free cash flow for Year 2.
4. Briefly explain why cash declined so sharply during the year.
We value our customers and so we ensure that what we do is 100% original..
With us you are guaranteed of quality work done by our qualified experts.Your information and everything that you do with us is kept completely confidential.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreThe Product ordered is guaranteed to be original. Orders are checked by the most advanced anti-plagiarism software in the market to assure that the Product is 100% original. The Company has a zero tolerance policy for plagiarism.
Read moreThe Free Revision policy is a courtesy service that the Company provides to help ensure Customer’s total satisfaction with the completed Order. To receive free revision the Company requires that the Customer provide the request within fourteen (14) days from the first completion date and within a period of thirty (30) days for dissertations.
Read moreThe Company is committed to protect the privacy of the Customer and it will never resell or share any of Customer’s personal information, including credit card data, with any third party. All the online transactions are processed through the secure and reliable online payment systems.
Read moreBy placing an order with us, you agree to the service we provide. We will endear to do all that it takes to deliver a comprehensive paper as per your requirements. We also count on your cooperation to ensure that we deliver on this mandate.
Read more