AFM101 Lecture Notes - Lecture 3: Cash Flow Statement, Financial Statement
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MULDUR CORPORATION | |||
Comparative Balance Sheets | |||
December 31 | |||
2012 | 2011 | ||
Cash | $ 15,200 | $ 17,700 | |
Accounts receivable | 25,200 | 22,300 | |
Investments | 20,000 | 16,000 | |
Equipment | 60,000 | 70,000 | |
Accumulated depreciation | (14,000) | (10,000) | |
Total | $106,400 | $116,000 | |
Accounts payable | $ 14,600 | $ 11,100 | |
Bonds payable | 10,000 | 30,000 | |
Common stock | 50,000 | 45,000 | |
Retained earnings | 31,800 | 29,900 | |
Total | $106,400 | $116,000 |
Additional information:
- Net income was $18,300. Dividends declared and paid were$16,400.
- Equipment which cost $10,000 and had accumulated depreciationof $1,200 was sold for $3,300.
- All other changes in noncurrent account balances had a directeffect on cash flows, except the change in accumulateddepreciation.
Prepare a statement of cash flows for 2012 using the indirectmethod.
Compute free cash flow
During the period, Sanchez Company sold some excess equipment at a loss. The following information was collected from the companyâs accounting records:
From the Income Statement | ||
Depreciation expense | $ | 940 |
Loss on sale of equipment | 3,900 | |
From the Balance Sheet | ||
Beginning equipment | 20,700 | |
Ending equipment | 10,500 | |
Beginning accumulated depreciation | 1,920 | |
Ending accumulated depreciation | 1,750 | |
No new equipment was bought during the period.
Required:
1. For the equipment that was sold, determine its original cost, its accumulated depreciation, and the cash received from the sale. (Use the equipment and accumulated depreciation T-accounts to infer the book value of the equipment sold.)
2. Sanchez Company uses the indirect method for the Operating Activities section of the cash flow statement. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Operating Activities? (Input the amount as positive value.)
The____of_____would be _____.
3. What amount related to the sale would be added or subtracted in the computation of Net Cash Flows from Investing Activities? (Input the amount as positive value.)
The cash_____of____would be______.