P-15-07 Name:

Section:

Enter the appropriate amount or item in the shaded cells. Use the drop-down lists when available.
An asterisk (*) will appear next to an incorrect entry in the outlined cells.
Enter any cash outflows and deductible values with minus sign in Statement of Cash Flows.

1.
Reed Corporation
Statement of Cash Flows
For the Year Ended June 30, 2014

Cash flows from operating activities:

Adjustments to reconcile net income to net

cash flows from operating activities:

Changes in current assets and current liabilities:

Net cash flows from operating activities

Cash flows from investing activities:

Cash flows from financing activities:

Net cash flows from financing activities

Net in cash

Schedule of Noncash Investing and Financing Transactions

2. Enter all amouns as positive values.

The primary reasons for the increase, in addition

to net income of were:

a. accounts receivable between year

b. inventory between years
c. accounts payable between years
d. Depreciation expense (a noncash expense)
e. income taxes payable between years

3.

Cash Flow Yield =

= times

Free Cash Flow =

P-15-07_Sol. Name: Solution
Section:

Enter the appropriate amount or item in the shaded cells. Use the drop-down lists when available.
An asterisk (*) will appear next to an incorrect entry in the outlined cells.
Enter any cash outflows and deductible values with minus sign in Statement of Cash Flows.

1.
Reed Corporation
Statement of Cash Flows
For the Year Ended June 30, 2014

Cash flows from operating activities:

Net income $ 239,200
Adjustments to reconcile net income to net
cash flows from operating activities:
Depreciation $ 120,000
Loss on sale of equipment 8,000
Changes in current assets and current liabilities:
Decrease in accounts receivable 40,000
Decrease in inventory 80,000
Decrease in prepaid expenses 800
Increase in accounts payable 44,000
Increase in income taxes payable 16,000 308,800
Net cash flows from operating activities $ 548,000

Cash flows from investing activities:

Sale of equipment 6,000

Cash flows from financing activities:

Repayment of mortgage $ (40,000)
Repayment of notes payable (160,000)
Issue of notes payable 60,000
Payment of dividends (120,000)
Net cash flows from financing activities (260,000)

Net increase in cash $ 294,000

Cash at beginning of year 40,000
Cash at end of year $ 334,000

Schedule of Noncash Investing and Financing Transactions

Issue of mortgage for land and build. $ 200,000

2. Enter all amouns as positive values.

The primary reasons for the increase, in addition

to net income of $ 239,200 were:

a. Reduction of accounts receivable between year $ 40,000

b. Reduction of inventory between years $ 80,000
c. Increase in accounts payable between years $ 44,000
d. Depreciation expense (a noncash expense) $ 120,000
e. Increase in income taxes payable between years $ 16,000

3.

Cash Flow Yield =

$ 548,000 / $ 239,200 = 2.3 times

Free Cash Flow = $ 434,000