Accounting hw help Meera Corporation’s comparative balance sheets are presented below.?

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I get the loss of sale land wrong. I can’t seem to get the right number. I’ve put down $6000 and $5000 but it’s wrong.

Loss on Sale of Land ???

Cash Flow From Investing Activities

Sale of Land $5000

??? <— don’t know what goes here

Payment of Dividends $-1950

Issuance of Common stock 3000

???<–IDK what goes here -1650

Net Increase in Cash ???

Cash at the Beginning of the Period ???

Cash at the End of Period 14700

I can’t figure out how to calculate the free cash flow either.

I know the equation is : Free Cash Flow= Cash provided by operating activities – Capital Expenditures – Cash Dividends

I don’t need someone to DO my hw for me. But I need someone to help me on how to get the stuff that’s in question marks. The rest I have right.

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Meera Corporation’s comparative balance sheets are presented below.

MEERA CORPORATION

Comparative Balance Sheets

December 31

2014 2013

Cash

$14,700 $10,700

Accounts receivable

20,800 23,400

Land

20,000 26,000

Buildings

70,000 70,000

Accumulated depreciation—buildings

(15,000) (10,000)

Total

$110,500 $120,100

Accounts payable

$12,370 $28,100

Common stock

75,000 72,000

Retained earnings

23,130 20,000

Total

$110,500 $120,100

Additional information:

1. Net income was $22,630. Dividends declared and paid were $19,500.

2. All other changes in noncurrent account balances had a direct effect on cash flows, except the change in accumulated depreciation. The land was sold for $5,000.

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(a) Prepare a statement of cash flows for 2014 using the indirect method. (Show amounts that decrease cash flow with either a – sign e.g. -15,000, or in parenthesis e.g. (15,000).)

2 Answers

  • The land was sold for $5,000. But the land account decreased from $26,000 to $20,000 ($6,000). So there must have been a $1,000 loss on the land. This is added in the operating activities section of the statement of cash flows.

    Statement of Cash Flows

    Operating activities

    $22,630 net income

    + 5,000 depreciation

    + 2,600 decrease in accounts receivable

    – 15,730 decrease in accounts payable

    + 1,000 loss on sale of land

    = $15,500 cash flow from operating activities

    Investing activities

    $5,000 sale of land

    = $5,000 cash flow from investing activities

    Financing activities

    $3,000 cash from issuance of common stock

    – 19,500 cash dividends paid

    = -$16,500 cash used by financing activities

    15,500 + 5,000 – 16,500 = $4,000 total cash flow

    + 10,700 beginning cash balance

    = $14,700 ending cash balance

    Using your free cash flow formula

    15,500 – 0 – 19,500 = -$4,000


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