I've asked the question regarding an Indirect Method of Wolff Cash Statement. I need to find the free cash flow and the answer you gave me said incorrect when I put it in. I am putting it as a negative answer. Cash Flow from Operating ActivitiesNet Income56,000Add (deduct) items to convert net income to cash basisDepreciation17,000Accounts Receivable(9,000) vIncreaseInventory(30,000)IncreasePrepaid InsuranceDecrease2,000Accounts PayableDecrease(3,000) vWages PayableIncrease3,000 vIncome Tax PayableDecrease(1,000) vCash Flow Provided by Operating Activities35,000 vCash Flow from Investing ActivitiesPurchase of Plant Assets(55,000)Cash Flow from Financing ActivitiesIssuance of Bonds PayablePayment of Dividends55,000 v(29,000)Cash Provided by Financing Activities26,000 vNet Change in Cash6,000Cash at Beginning of Year5,000 vCash at End of Year11,000 vc. Free cash flow $ (49,000)icash-flow-to-current-liabilities rati

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Cash Flow from Operating Activities Net Income 56,000 Add (deduct) items to convert net income to cash basis Depreciation 17,000 v Accounts Receivable Increase (9,000) Inventory Increase (30,000) Prepaid Insurance Decrease 2,000 Accounts Payable Decrease (3,000) Wages Payable Increase 3,000 v Income Tax Payable Decrease (1,000) v Cash Flow Provided by Operating Activities 35,000 Cash Flow from Investing Activities Purchase of Plant Assets (55,000) Cash Flow from Financing Activities Issuance of Bonds Payable Payment of Dividends 55,000 v (29,000) v Cash Provided by Financing Activities 26,000 v Net Change in Cash 6,000 Cash at Beginning of Year 5,000 v Cash at End of Year 11,000 v c. Free cash flow s (49,000) x icash-flow-to-current-liabilities ratio

Cash Flow from Operating Activities Net Income 56,000 Add (deduct) items to convert net income to cash basis Depreciation 17,000 v Accounts Receivable Increase (9,000) Inventory Increase (30,000) Prepaid Insurance Decrease 2,000 Accounts Payable Decrease (3,000) Wages Payable Increase 3,000 v Income Tax Payable Decrease (1,000) v Cash Flow Provided by Operating Activities 35,000 Cash Flow from Investing Activities Purchase of Plant Assets (55,000) Cash Flow from Financing Activities Issuance of Bonds Payable Payment of Dividends 55,000 v (29,000) v Cash Provided by Financing Activities 26,000 v Net Change in Cash 6,000 Cash at Beginning of Year 5,000 v Cash at End of Year 11,000 v c. Free cash flow s (49,000) x icash-flow-to-current-liabilities ratio

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

I've asked the question regarding an Indirect Method of Wolff Cash Statement. I need to find the free cash flow and the answer you gave me said incorrect when I put it in. I am putting it as a negative answer.

Cash Flow from Operating Activities
Net Income
56,000
Add (deduct) items to convert net income to cash basis
Depreciation
17,000
Accounts Receivable
(9,000) v
Increase
Inventory
(30,000)
Increase
Prepaid Insurance
Decrease
2,000
Accounts Payable
Decrease
(3,000) v
Wages Payable
Increase
3,000 v
Income Tax Payable
Decrease
(1,000) v
Cash Flow Provided by Operating Activities
35,000 v
Cash Flow from Investing Activities
Purchase of Plant Assets
(55,000)
Cash Flow from Financing Activities
Issuance of Bonds Payable
Payment of Dividends
55,000 v
(29,000)
Cash Provided by Financing Activities
26,000 v
Net Change in Cash
6,000
Cash at Beginning of Year
5,000 v
Cash at End of Year
11,000 v
c. Free cash flow $ (49,000)
icash-flow-to-current-liabilities rati

Definition Definition Cash that is left over after a company has paid for its operating and capital expenses. Unlike net income or earnings, free cash flow excludes non-cash expenses of the income statement and includes the expenditures on equipment and assets. Free cash flow also helps potential shareholders to evaluate how quickly the company can pay interest and dividends.

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