2012[ $1 2011[S]Operating CashAccounts ReceivableInventoriesLand[ Unamortized cost)435,00050,00040,000100,000400,000200,000800,000Plant Assets200,000Less: Accumulated-100,000depreciation1,075,000 1,050,00025,0001,050,000 1,050,0001,075,000 1,050,000Accounts PayableShare capitalThe Company paid a dividend of $150,000during 2012and there were no equitycontributions or stock repurchases. Required:a. Calculate free cash flow generated during 2012.b. Where did the increase in cash come from?c. How would your calculations in part (a) change if the firm invested in short-term deposits rather than paying a dividend?

The cash flow from operations is to be computed by adjusting non-cash expenses to the net income and…

Answered: Operating Cash 435,000 40,000 50,000…

Business

Accounting

Operating Cash 435,000 40,000 50,000 Accounts Receivable 100

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

2012[ $1 2011[S]
Operating Cash
Accounts Receivable
Inventories
Land[ Unamortized cost)
435,000
50,000
40,000
100,000
400,000
200,000
800,000
Plant Assets
200,000
Less: Accumulated
-100,000
depreciation
1,075,000 1,050,000
25,000
1,050,000 1,050,000
1,075,000 1,050,000
Accounts Payable
Share capital
The Company paid a dividend of $150,000during 2012and there were no equity
contributions or stock repurchases.

Required:
a. Calculate free cash flow generated during 2012.
b. Where did the increase in cash come from?
c. How would your calculations in part (a) change if the firm invested in short-
term deposits rather than paying a dividend?

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