Question

resented below is a condensed version of the comparative balance sheets for Zubin Mehta Corporation for the last two years at December 31. 2015 $177.000 180.000 52.000 298,000 201 $ 78.000 185.000 74,000 Cash Accounts receivable Investments Equipment Accumulated depreciation-equipment Current liabilities Common stock Retained earnings Additional information: Investments were sold at a loss (not extraordinary) of $10,000: no equipment was soid: cash dividends paid were $30.000 and net income was $160,000. Instructions (a) Prepare a statement of cash flows for 2014for Zubin Mehta Corporation. (b) Determine Zubin Mehta Corporation's free cash flow 240,000 (89.000) 151,000 160.000 177,000 (106.000) 134.000 160,000 307.000 03) Chinnewas Inc bas

Answer 1

a)

Zubin Mehta Corporation

Statement of Cash Flows

For the Year Ended December 31. 2015

Cash flows from operating activities:

Net income $160,000

Adjustments to net income:

• Depreciation expense $17,000
• Decrease in accounts receivable $5,000
• Loss on sale of investments $10,000
• Decrease in current liabilities ($17,000) $15,000

Net cash flow from operating activities $175,000

Cash flow from investing activities:

Sale of investment $12,000

Purchase of equipment ($58,000)

Net cash flow from investing activities ($46,000)

Cash flow from financing activities:

Paid dividends ($30,000)

Net cash flow from financing activities ($30,000)

Net increase in cash $99,000

Cash balance December 31, 2014 $78,000

Cash balance December 31, 2015 $177,000

b) free cash flow for 2015 = $99,000