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Problem 14-9 - Statement of Cash flows

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Question;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.

 

Paper#44649 | Written in 18-Jul-2015

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