Question

Problem 12-08A Presented below are the financial statements of Flounder Company. Flounder Company Comparative Balance Sheets December 31 Assets 2022 Cash $ 77,000 Accounts receivable 44,000 Inventory 61,600 Property, plant, and equipment 132,000 Accumulated depreciation (70,400 ) Total $244,200 2021 $ 44,000 30,800 44,000 171,600 (52,800) $237,600 Liabilities and Stockholders' Equity Accounts payable Income taxes payable Bonds payable Common stock Retained earnings Total $ 41,800 15,400 37,400 39,600 110,000 $244,200 $ 33,000 17,600 72,600 30,800 83,600 $237,600 $532,400 385,000 147,400 Flounder Company Income Statement For the Year Ended December 31, 2022 Sales revenue Cost of goods sold Gross profit Selling expenses $39,600 Administrative expenses 13,200 Income from operations Interest expense Income before income taxes Income tax expense Net income 52,800 94,600 6,600 88,000 17,600 $ 70,400 Additional data: 1. Depreciation expense was $38,500. 2. Dividends declared and paid were $44,000. 3. During the year equipment was sold for $18,700 cash. This equipment cost $39,600 originally and had accumulated depreciation of $20,900 at the time of sale. Further analysis reveals the following. 1. Accounts payable pertain to merchandise suppliers. 2. All operating expenses except for depreciation were paid in cash 3. All depreciation expense is in the selling expense category. 4. All sales and purchases are on account. Prepare a statement of cash flows for Flounder Company using the direct method. (Show amounts in the investing and financing sections that decrease cash flow with either a sign e.g. 15,000 or in parenthesis e.g. (15,000). )

Please answer to match the statement of cash flow chart. Don't forget to compute the Free Cash Flow at the bottom.

Answer 1

	Flounder company
Statement of cash flow
for the year ended December 31,2017
Cash flows from operating activities
Cash receipts from customers						519,200
less:cash paid for operating expense
Cash paid for Merchandise					393,800
Cash paid for selling/administrative expense					14,300
cash paid for interest expense					6,600
cash paid for income taxes					19,800
						434,500
Net cash provided by operating activities						84,700
Cash flows from Investing Activities
Cash from sale of equipment						18,700
Cash flows from financing activities
Redemption of bonds payable					-35200
Issuance of capital stock					8800
payment of cash dividends					-44000
net cash used by financing activities						-70400
Net increase in cash						33,000
Cash at beginning of period						44,000
Cash at end of period						77,000
Free cash flow
net cash provided by operating activities- cash dividend
84700-44000
40,700

Working notes:
Cash receipts from customers
Sales revenue				532,400
less:increase in accounts receivable				-13200
Cash receipts from customers				519,200
Cash paid for Merchandise
cost of goods sold				385,000
Add:increase in inventory				17600
less:increase in accounts payable				-8800
Cash paid for Merchandise				393,800
Cash paid for selling/administrative expense
selling and administrative expense				52,800
less :Depreciation expense				-38500
Cash paid for selling/administrative expense				14,300
cash paid for income tax
income tax expense				17,600
Add:Decrease in income taxes payable				2200
cash paid for income tax				19,800