Cash at the beginning of year 60000 Cash at the end of year 108000 2 Free Cash

Cash at the beginning of year 60000 cash at the end

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Cash at the beginning of year 60,000 Cash at the end of year $108,000 (2)
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Free Cash Flow = $41,000 (Net cash provided by operating activities) – $8,000 (Purchase of equipment) – $5,000 (Dividends) = $28,000. EXERCISE 5-14 The comparative balance sheets of Constantine Cavamanlis at the beginning and the end of the year 2017 are as follows: Constantine Cavamanlis Inc. Balance Sheet Dec. 31, 2017 Jan. 1, 2017 Assets Cash $45,000 $13,000 Accounts Receivable 91,000 88,000 Equipment 39,000 22,000 Less: Accumulated depreciation--equipment 17,000 11,000 Total $158,000 $112,000 Liabilities and Stockholder's Equity Accounts Payable $20,000 $15,000 Common Stock 100,000 80,000 Retained Earnings 38,000 17,000 Total $158,000 $112,000 Net income of $44,000 was reported, and dividends of $23,000 were paid in 2017. New equipment was purchased and none was sold. Instruction: Prepare a statement of cash flow for the year 2017.
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Solution: Constantine Cavamanlis Inc. Statement of Cash Flows For the Year Ended December 31, 2017 Cash flows from operating activities Net income ......................................................................................... $44,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense ................................................................... $ 6,000 Increase in accounts receivable .................................................... (3,000) Increase in accounts payable ........................................................ 5,000 8,000 Net cash provided by operating activities .......................................... 52,000 Cash flows from investing activities Purchase of equipment ....................................................................... (17,000) Cash flows from financing activities Issuance of common stock ................................................................. 20,000 Payment of cash dividends ................................................................. (23,000 ) Net cash used by financing activities ................................................. (3,000 ) Net increase in cash ................................................................................. 32,000 Cash at beginning of year ........................................................................ 13,000 Cash at end of year ................................................................................... $45,000
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