E5.15. Presented below is a condensed version of the comparative balance
sheets for Sondergaard Corporation for the last two years at December 31.
2012
... [Show More] 2011
Cash $157,000 $ 78,000
Accounts receivable 180,000 185,000
Investments 52,000 74,000
Equipment 298,000 240,000
Less: Acc'd dep'n—equip't -106,000 -89,000
Current liabilities 134,000 151,000
Capital stock 160,000 160,000
Retained earnings 287,000 177,000
Additional information: Investments were sold at a loss (not extraordinary)
of $7,000; no equipment was sold; cash dividends paid were $50,000; and net
income was $160,000.
(a) Prepare a statement of cash flows for 2012 for Sondergaard
Corporation.
(b) Determine Sondergaard Corporation's free cash flow.
EXERCISE 5-15 (25–35 minutes)
(a) SONDERGAARD CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2012
Cash flows from operating activities
Net income.................................................................... $160,000
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation expense............................................ $17,000
Loss on sale of investments................................. 7,000
Decrease in accounts receivable......................... 5,000
Decrease in current liabilities............................... (17,000) 12,000
Net cash provided by operating activities................. 172,000
Cash flows from investing activities
Sale of investments
[($74,000 – $52,000) – $7,000].................................. 15,000
Purchase of equipment............................................... (58,000)
Net cash used by investing activities........................ (43,000)
Cash flows from financing activities
Payment of cash dividends......................................... (50,000
)
Net increase in cash.......................................................... 79,000
Cash at beginning of year................................................. 78,000
Cash at end of year............................................................ $157,000 [Show Less]