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Prepare the operating activities section—indirect method.
E12-3 Sosa Company reported net income of $190,000 for 2017. Sosa also reported depreciation expense of $35,000 and a loss of $5,000 on the disposal of plant assets. The comparative balance sheets show an increase in accounts receivable of $15,000 for the year, a $17,000 increase in accounts payable, and a $4,000 increase in prepaid expenses.
Instructions
Prepare the operating activities section of the statement of cash flows for 2017. Use the indirect method.
Compare free cash flow of two companies.
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E12-10 Information for two companies in the same industry, Merrill Corporation and Wingate Corporation, is presented here.
Merrill Corporation Wingate Corporation
Net cash provided by operating activities $ 80,000 $100,000
Average current liabilities 50,000 100,000
Net income 200,000 200,000
Capital expenditures 40,000 70,000
Dividends paid 5,000 10,000
Instructions
Compute free cash flow for both companies and compare.
