Exercise 5-18 The comparative balance sheets of Sarasota Corporation at the begi
ID: 2519909 • Letter: E
Question
Exercise 5-18 The comparative balance sheets of Sarasota Corporation at the beginning and end of the year 2017 appear below SARASOTA CORPORATION BALANCE SHEETS Dec. 31, 2017 Jan. 1, 2017 Inc./Dec. Assets Cash Accounts receivable Equipment Less: Accumulated Depreciation-Equipment $21,430 107,430 40,430 $14,860 $6,570 Inc. 89,860 17,570 Inc. 23,860 16,570 Inc. (17,000 (11,000) 6,000 Inc. $117,580 Total Liabilities and Stockholders' Equity Accounts payable Common stock Retained earnings $152,290 $21,430 101,430 29,430 $152,290 $16,860 81,860 18,860 $117,580 4,570 Inc. 19,570 Inc. 10,570 Inc. Total Net income of $45,430 was reported, and dividends of $34,860 were paid in 2017. New equipment was purchased and none was sold Your answer is partially correct. Try again Prepare a statement of cash flows for the year 2017. (Show amounts that decrease cash flow with either a -sign e.g. -15,000 or in parenthesis e.g. (15,000).Explanation / Answer
SARASOTA CORPORATION Statement of Cash Flows For the year Ended December31, 2017 Cash flows from Operating activities : Net Income 45,430 Adjustment to reconcile net income to Net cash provided by operating activities Depreciation 6,000 Increase in Accounts Receivable (17,570) Increase in Accounts Payable 4,570 (7,000) Net cash provided by operating activities 38,430 Cash flow from Investing activities Purchase of Equipment (16,570) Cash flow from Financing activities Issuance of Stock 19,570 Payment of Dividends (34,860) Net cash used by Financing activities (15,290) Net Increase in Cash 6,570 Cash at beginning of year 14,860 Cash at end of year 21,430 Current Ratio = Current Assets/ Current Liabilities December 31, 2017 January 1,2017 Cash 21,430 14,860 Accounts Receivable 107,430 89,860 Current Assets 128,860 104,720 Accounts Payable 21,430 16,860 Current Liabilities 21,430 16,860 Current Ratio 6.0 6.2 Free Cash flow = Net cash provided by operating activities - Capital Expenditure Free Cash flow = 38,430-16,570 = $21,860