Question

Brief Exercise 5-12 Crane Beverage Company reported the following items in the most recent year. Net income $48,300 Dividends paid 6,320 Increase in accounts receivable 11,860 Increase in accounts payable 7,470 Purchase of equipment (capital expenditure) 8,710 Depreciation expense 4,470 Issue of notes payable 22,850 Compute net cash provided by operating activities, the net change in cash during the year

Answer 1

Crane Beverage Company

Statement of Cash Flows

Particulars Details Amount

Cash Flow from Operating Activities:

Net Income $48,300

Adjustments to reconcile net income to

cash flow from operating activities:

Depreciation $ 4,470

Increase in Accounts receivable -$11,860

Increase in Accounts payable $7,470 $80

Net Cash Flow From Operating Activities (A) $48,380

Cash Flow from Investing Activities:

Purchase of Equipment -$8,710

Net Cash Flow From Investing Activities (B) -$8,710

Cash Flow from Financing Activities:

Issue of note payable $22,850

Dividend paid -$6,320

Net Cash Flow From Financing Activities (C) $16,530

Net Change in Cash (A + B+ C) $56,200

Free Cash flow = Net cash provided by operating activities - Purchase of equipment - Dividend paid

= $48,380 -$8,710 - $6,320

= $33,350