Preparing the Statement of Cash Flows The comparative balance sheets for Beckwith Products Company are presented below. Additional Information: 1. Net income for 2019 was $58,400. 2. Cash dividends of $25,000 were declared and paid during 2019. 3. During 2019, Beckwith issued $50,000 of notes payable and repaid $35,000 principal relating to notes payable. 4. Common stock was issued for $50,000 cash. 5. Depreciation expense was $18,650, and there were no disposals of equipment. Required: 1. Prepare a statement of cash flows (indirect method) for Beckwith Products for 2019. 2. Compute the following cash-based performance measures: (a) free cash flow and (b) cash flow adequacy. ( Note: Assume that the average amount of debt maturing over the next 5 years is $85,000. Round ratio to two decimal places.) 3. CONCEPTUAL CONNECTION What can you conclude by examining the patterns in Beckwith’s cash flows?

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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881
BuyFind

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
Publisher: Cengage Learning
ISBN: 9781337690881

Solutions

Chapter
Section
Chapter 11, Problem 47E
Textbook Problem

Preparing the Statement of Cash Flows

The comparative balance sheets for Beckwith Products Company are presented below.

Chapter 11, Problem 47E, Preparing the Statement of Cash Flows The comparative balance sheets for Beckwith Products Company

Additional Information:

1. Net income for 2019 was $58,400.

2. Cash dividends of $25,000 were declared and paid during 2019.

3. During 2019, Beckwith issued $50,000 of notes payable and repaid $35,000 principal relating to notes payable.

4. Common stock was issued for $50,000 cash.

5. Depreciation expense was $18,650, and there were no disposals of equipment.

Required:

1. Prepare a statement of cash flows (indirect method) for Beckwith Products for 2019.

2. Compute the following cash-based performance measures: (a) free cash flow and (b) cash flow adequacy. ( Note: Assume that the average amount of debt maturing over the next 5 years is $85,000. Round ratio to two decimal places.)

3. CONCEPTUAL CONNECTION What can you conclude by examining the patterns in Beckwith’s cash flows?

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Chapter 11 Solutions

Cornerstones of Financial Accounting
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