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.
Meera Corporation’s comparative balance sheets are presented below.
Comparative Balance Sheets
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.
(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).)
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
$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
$5,000 sale of land
= $5,000 cash flow from investing 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