Preparing the statement of cash flows-indirect method, evaluating cash flows, and measuring free cash flows
The comparative balance sheet of Jackson Educational Supply at December 31,
2012, reported the following:
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December 31,
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2012
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2011
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|
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Current assets:
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|
|
|
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Cash and cash equivalents
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$ 88,200
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$ 22,500
|
|
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Accounts receivable
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14,400
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21,700
|
|
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Inventories
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63,600
|
60,400
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|
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Current liabilities:
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|
|
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Accounts payable .
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28,600
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27,100
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|
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Accrued liabilities .
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10,600
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11,200
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|
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Jackson's transactions during 2012 included the following:
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Depreciation expense
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$ 16,700
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Payment of cash dividend
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$ 17,200
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Purchase of building
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100,000
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Purchase of equipment
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54,400
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Net income
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59,600
|
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Issuance of long-term note payable to borrow cash
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50,000
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Issuance of common stock for cash
|
106,000
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Requirements
1. Prepare the statement of cash flows of Jackson Educational Supply for the year ended December 31, 2012. Use the indirect method to report cash flows from operating activities.
2. Evaluate Jackson's cash flows for the year. Mention all three categories of cash flows and give the reason for your evaluation.
3. If Jackson plans similar activity for 2013, what is its expected free cash flow?