Question

Keyser Beverage Company reported the following items in the most recent year.

Net income $44,500
Dividends paid 6,220
Increase in accounts receivable 11, 290
Increase in accounts payable 7,890
Purchase of equipment (capital
expenditure) 9,400
Depreciation expense 6,890
Issue of notes payable 24,960
Compute net cash provided by operating activities, the net change in cash during the year. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Answer and Explanation:

The computation of net cash provided by operating activities is shown below:-

Keyser Beverage Company

Statement of Cash Flows

Particulars Amount

Cash Flow from Operating Activities:

Net Income $44,500

Adjustments to reconcile net income

Depreciation $6,890.00

Increase in Accounts receivable -$11,290

Increase in Accounts payable 7,890 $3,490

Net Cash Flow From Operating Activities a $47,990

Cash Flow from Investing Activities

Purchase of Equipment -$9,400

Net Cash Flow From Investing Activities b -$9,400

Cash Flow from Financing Activities

Issue of note payable $24,960

Dividend paid -$6,220

Net Cash Flow From Financing Activities c $18,740

Net Change in Cash (a + b + c) $57,330

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

= $47,990 - $9,400 - $6,220

= $32,370