Question Details

Prepare a statement of cash flows for 2011 



1
Powell Corporation's comparative statement of financial position are presented below.
POWELL CORPORATION
Comparative Statement of Financial Position
December 31
	   2011  	  2010	
	Land	€18,000	€26,000
	Building	70,000	70,000
	Accumulated depreciation	  (15,000)	 (10,000)
	Accounts receivable 	    18,200	    23,400
	Cash	 19,300	 10,700
	     Total	€110,500	€120,100
	
	Share capital-ordinary 	€75,000	€69,000
	Retained earnings	    23,130	   20,000
	Accounts payable	    12,370	    31,100
	    Total	€110,500	€120,100

Additional information:
1.	Net income was €25,630. Dividends declared and paid were €22,500.
2.	All other changes in non-current account balances had a direct effect on cash flows, except 	the change in accumulated depreciation. The land was sold for €5,900.

Instruction
(a)	Prepare a statement of cash flows for 2011 using the indirect method.
(b)	Compute free cash flow.

2
Newman Corporation's comparative statement of financial position are presented below.
NEWMAN CORPORATION
Comparative Statement of Financial Position
December 31
	    2011   	  2010	
	Equipment	$ 60,000	$   70,000
	Accumulated depreciation	  (14,000)	 (10,000)
	Investments	25,000	16,000
	Accounts receivable 	25,200	22,300
	Cash	   10,200	    17,700
	     Total	$106,400	$116,000

	Share capital-ordinary	$  50,000	$  45,000
	Retained earnings	    31,800	    29,900
	Bonds payable	    10,000	  30,000
	Accounts payable 	    14,600	    11,100
	    Total 	$106,400	$116,000

Additional information:
1.	Net income was $15,300. Dividends declared and paid were $13,400.
2.	Equipment which cost $10,000 and had accumulated depreciation of $2,200 was sold for 	$3,800.
3.	All other changes in non-current account balances had a direct effect on cash flows, except 	the change in accumulated depreciation.

Instruction
(a)	Prepare a statement of cash flows for 2011 using the indirect method.
(b)	Compute free cash flow.




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