Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 14: Q3TI (page 752)

Question: Kalapono Company expects the following for 2018:

• Net cash provided by operating activities of \(100,000.

• Net cash provided by financing activities of \)10,000.

• Net cash used for investing activities of \(20,000 (no sales of long-term assets).

• Cash dividends paid to stockholders was \)2,000.

How much free cash flow does Kalapono expect for 2018?

Short Answer

Expert verified

Answer

Free cash flow expected by Kalapono is $78,000.

Step by step solution

01

Cash flow from operating activities 

The planned investment in long-term assets is deducted from the net cash provided by operating activities. Here, net cash used for investing activities will be deducted from the cash provided by operating activities.

02

Calculation of free cash flow Kalapono expect for 2018

Particulars

Amount($)

Net cash provided by operating activities

100,000

Cash payments planned for investments in long-term assets

(20,000)

Cash dividends

(2,000)

Free cash flow

78,000

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Use the Rouse Exercise Equipment data in Exercises E14-23 and E14-24. Rouse plansto purchase a truck for \(23,000 and a forklift for \)125,000 next year. In addition, itplans to pay cash dividends of $3,500. Assuming Rouse plans similar activity for 2019,what would be the amount of free cash flow?

Question: How does the statement of cash flows help users of financial statements?

Preparing the direct method statement of cash flows Red Toy Company reported the following comparative balance sheet:

Requirements

1. Compute the collections from customers during 2018 for Red Toy Company. Sales Revenue totaled \(134,000.

2. Compute the payments for inventory during 2018. Cost of Goods Sold was \)79,000.

Preparing the statement of cash flows—indirect method

Accountants for Morganson, Inc. have assembled the following data for the year ended December 31, 2018:

2018 2017 Current Assets: Cash \( 99,400 \) 25,000 Accounts Receivable 64,100 69,700 Merchandise Inventory 83,000 75,000 Current Liabilities: Accounts Payable 57,600 55,200 Income Tax Payable 14,800 16,800

Transaction Data for 2018:

Issuance of common stock for cash \( 38,000

Payment of notes payable \) 46,100

Depreciation expense 24,000

Payment of cash dividends 50,000

Purchase of equipment with cash 74,000

Issuance of notes payable to borrow cash 62,000

Acquisition of land by issuing long-term notes payable 119,000

Gain on sale of building 4,500 Book value of building sold 54,000

Net income 68,500

Prepare Morganton'sstatement of cash flows using the indirect method. Include an accompanying schedule of non-cash investing and financing activities.

Question: How does the direct method differ from the indirect method when preparing the operating activities section of the statement of cash flows?
See all solutions

Recommended explanations on Business Studies Textbooks

Business Case Studies

Read Explanation

Human Resources

Read Explanation

Nature of Business

Read Explanation

Introduction to Business

Read Explanation

Managers

Read Explanation

Intermediate Accounting

Read Explanation
View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free