Question

Exercise 12-8 Blue Spruce Corp.'s comparative balance sheets are presented below. Blue Spruce Corp. Comparative Balance Sheets December 31 2019 2018 15,200 $10,600 Cash 20,700 23,500 Accounts receivable 20,300 26,300 Land 69,900 69,900 Buildings (14,800) (10,500) Accumulated depreciation-buildings $111,300 $119,800 Total Accounts payable $11,800 $28,300 75,900 71,600 Common stock Retained earnings 23,600 19,900 $111,300 $119,800 Total Additional information: 1. Net income was $23,100. Dividends declared and paid were $19,400. 2. No noncash investing and financing activities occurred during 2019. 3. The land was sold for cash of $4,500.

Answer 1

23100 Blue Spruce Corp. Statement of Cash Flows For the Year Ended December 31, 2019 Cash flows from Operating Activities Net Income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation expense Loss on sale of land Decrease in accounts receivable Decrease in accounts payable Net cash flow from Operating Activities Cash flows from Investing Activities Proceed from sale of land Cash flows from Financing Activities Cash dividend paid Issuance of common stock Net Cash flow from Financing Activities Net increase in cash Beginning cash balance Ending cash balance 4300 1500 2800 -16500 -7900 15200 4500 -19400 4300 -15100 4600 10600 15200 Free cash flow = Net cash flow from operating activities - Net capital spending - Cash dividend paid Free cash flow = $15,200 - (-$4,500) - $19,400 Free cash flow = $300

Answer 2

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