Exercise 137 Part Level Submission Rojas Corporations compar

Exercise 13-7 (Part Level Submission) Rojas Corporation\'s comparative balance sheets are presented below. ROJAS CORPORATION Comparative Balance Sheets December 31 2017 2016 Cash Accounts receivable Land Buildings Accumulated depreciation-buildings $14,300 ,200 20,000 70,000 $ 10,700 23,400 26,000 70,000 (15,000) (10,000) Total $110,500 $120,100 Accounts payable Common stock Retained earnings $ 12,370 75,000 23,130 $110,500 $ 31,100 69,000 20,000 $120,100 Total Additional information: 1. Net income was $22,630. Dividends declared and paid were $19,500. 2. No noncash investing and financing activities occurred during 2017. 3. The land was sold for cash of $4,900.

Solution

Computation of Free cash flow

Free cash flow= Operating cash flow – Capital expenditure – Dividend

Calculation of Operating cash flow

Net Income                                                                 22630

Add; Depreciation 5000

Add; Loss on sale of land (26,000-20,000-4900) 1100

Add; Decrease in Receivables                                    2200

Less; Decrease in Payable                                       (18730)

Net cash flow from operating activities               12,200

FCF=$12,200-0-$19,500= ($7300)