FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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1. What is the cash flow statement using the indirect method? 

2. What is the free cash flow for this year? 

Comparative financial statement data for Carmono Company follow:
This Year
Last Year
Assets
Cash
$
8.50 $
16.00
Accounts receivable
54.00
47.00
Inventory
97.50
84.40
Total current assets
160.00
147.40
Property, plant, and equipment
Less accumulated depreciation
Net property, plant, and equipment
237.00
198.00
47.20
35.40
189.80
162.60
Total assets
$
349.80 $
310.00
Liabilities and Stockholders' Equity
Accounts payable
$
58.50
48.00
Common stock
126.00
97.00
Retained earnings
165.30
165.00
Total liabilities and stockholders' equity
$
349.80
$
310.00
For this year, the company reported net income as follows:
Sales
$950.00
Cost of goods sold
Gross margin
Selling and administrative expenses_ 360.00
570.00
380.00
Net income
$ 20.00
This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this
year. The company did not repurchase any of its own stock this year.
Required:
1. Using the indirect method, prepare a statement of cash flows for this year.
2. Compute Carmono's free cash flow for this year.
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Transcribed Image Text:Comparative financial statement data for Carmono Company follow: This Year Last Year Assets Cash $ 8.50 $ 16.00 Accounts receivable 54.00 47.00 Inventory 97.50 84.40 Total current assets 160.00 147.40 Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment 237.00 198.00 47.20 35.40 189.80 162.60 Total assets $ 349.80 $ 310.00 Liabilities and Stockholders' Equity Accounts payable $ 58.50 48.00 Common stock 126.00 97.00 Retained earnings 165.30 165.00 Total liabilities and stockholders' equity $ 349.80 $ 310.00 For this year, the company reported net income as follows: Sales $950.00 Cost of goods sold Gross margin Selling and administrative expenses_ 360.00 570.00 380.00 Net income $ 20.00 This year Carmono declared and paid a cash dividend. There were no sales of property, plant, and equipment during this year. The company did not repurchase any of its own stock this year. Required: 1. Using the indirect method, prepare a statement of cash flows for this year. 2. Compute Carmono's free cash flow for this year.
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