Flanders Corporation's income statement for the year ended June 30, 20x8 and its comparative balance sheets as of June 30, 20×8 and 20×7 appear on the opposite page. During 20×8, the corporation sold equipment that cost $48,000, on which it had accumulated depreciation of $34,000, at a loss of $8,000. It also purchased land and a building for $200,000 through an increase of $200,000 in Mortgage Payable; made a $40,000 payment on the mortgage; repaid notes but borrowed an additional $60,000 through the issuance of a new note payable; and declared and paid a $120,000 cash dividend.
For the Year Ended June 30, 20×8
Comparative Balance Sheets
June 30, 20×8 and 20×7
1. Using the indirect method, prepare a statement of cash flows. Include a supporting schedule of noncash investing and financing transactions.
2. User Insight: What are the primary reasons for Flanders Corporation's large increase in cash from 20×7 to 20×8?
3. User Insight: Compute and assess cash flow yield and free cash flow for 20×8. How would you assess the corporation's cash-generating ability?
This question was answered on: Jul 11, 2017
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