Exercise 177 Rojas Corporations comparative balance sheets a

Exercise 17-7 Rojas Corporation\'s comparative balance sheets are presented below ROJAS CORPORATION Comparative Balance Sheets 2017 2016 Cash Accounts receivable Land Buildings Accumulated depreciation-buildings $14,300 21,200 20,000 70,000 (15,000) $10,700 23,400 26,000 70,000 (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

Statement of Cash Flows Amount in $ Amount in $ Net income $             22,630 Cash flows from operating activities Adjustments for: Depreciation $                5,000 Loss on disposal of Land ($ 6000 - $ 4900) $                1,100 (Increase) / Decrease in Account receivables $                2,200 Accounts payable Increase / ( Decrese) $            -18,730 $            -10,430 Net cash from operating activities $             12,200 Cash flows from investing activities Sale of land $                4,900 Net cash used in investing activities $                4,900 Cash flows from Financing activities Issue of Common Stock $                6,000 Dividend Paid $            -19,500 Net cash used in financing activities $            -13,500 Net increase in cash and cash equivalents $                3,600 Add :Cash and cash equivalents at beginning of period $             10,700 Cash and cash equivalents at end of period $             14,300 Answer =2 : Free Cash Flow = Operating Cash Flow - Cash flow from investing Activities Answer =3 : Free Cash Flow = $ 12,200 + $ 4,900 $             17,100 Note: There is positive cash flow in investing activities so added