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Chapter 14: Q26P (page 780)

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?

Short Answer

Expert verified

The free cash flow amount of the company is $12,000.

Step by step solution

01

Free Cash Flow

Free cash flow means the cash produced by the company after considering and studying the cash outflows for running its business operations and keeping up its capital assets.

02

Calculation of free cash flows

Freecashflow=Cashflowfromoperatingactivity-Capitalexpenditure=$160,000-$23,000+$125,000=$12,000

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Most popular questions from this chapter

Use the Rouse Exercise Equipment data in Exercise E14-23. Prepare the company鈥檚 statement of cash flows鈥攊ndirect method鈥攆or the year ended December 31, 2018. Assume investments are purchased with cash.

Preparing the statement of cash flows鈥攊ndirect 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: Computing cash flows from investing and financing activities Use the data in Short Exercise S14-5 to complete this exercise. Prepare Winding Road Cellular鈥檚 statement of cash flows using the indirect method for the year ended April 30, 2018. Assume beginning and ending Cash are \(48,000 and \)52,200, respectively.

Question: Kalapono Company expects the following for 2018:

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

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

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

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

How much free cash flow does Kalapono expect for 2018?

Computing operating activities cash flow鈥攊ndirect method

The records of Vintage Color Engraving reveal the following:

Net income \( 36,000

Depreciation expense \) 5,000

Sales revenue 53,000

Decrease in current liabilities 19,000

Loss on sale of land 4,000

Increase in current assets other than cash 10,000

Acquisition of land 35,000

Compute cash flows from operating activities by the indirect method for year ended December 31, 2018.
See all solutions

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