2014 2013 Increase/decreaseAccounts Payable $6,000 $9,000 $(3,000)Accrued Liabilities 3,000 1,500 1,500Long-Term Notes Payable 126,000 135,000 (9,000)Total liabilities $135,000 $145,500 $(10,500)Additional information provided by the company includes the following:During 2014, the company repaid $60,000 of Long-Term Notes Payable.During 2014, the company borrowed $51,000 on a new Long-Term Note Payable.With the help of T-account format, analyze the transactions affecting the Long-Term Notes Payable account.
  • Answer: Net Cash from operating activities $25,000Less: Cash used in Long-Term Assets 0Less: Cash dividends 10,000Free Cash Flow $15,000
  • Answer: TRUEExplanation: Retained EarningsBeginning Balance $82,000Add: Net Income for the year 58,000 =$140,000Less: Retained Earnings for 2015 (108,000)Dividend Declared =$32,000
  • Answer: FALSE
  • Long Term Notes Payable______________________________________Dr CrRepay60,000 l 135,000 Beg l 51,000Borrowing ________________l__________________ l 126,000 Ending
Refer to the following information of Harris Inc. and calculate the free cash flow of Harris Inc.Net Cash from operating activities, $25,000Net Cash from financing activities, $35,000Net Cash used in investing activities, apart from investment in Long-Term Assets, $12,000.Net Cash used in investing activities, ($20,000)Investment in Long-Term Assets, $12,000Cash dividend paid $10,000.
  • Long Term Notes Payable______________________________________Dr CrRepay60,000 l 135,000 Beg l 51,000Borrowing ________________l__________________ l 126,000 Ending
  • Answer: TRUEExplanation: Retained EarningsBeginning Balance $82,000Add: Net Income for the year 58,000 =$140,000Less: Retained Earnings for 2015 (108,000)Dividend Declared =$32,000
  • It includes cash transactions affecting the long-term liabilities and equity of the business.
  • Answer: Net Cash from operating activities $25,000Less: Cash used in Long-Term Assets 0Less: Cash dividends 10,000Free Cash Flow $15,000
What is the equation to calculate Free Cash Flow
  • It shows the link between accrual based income and the cash reported on the balance sheet.
  • It includes cash transactions that primarily affect current assets and current liabilities.
  • It includes cash transactions affecting the long-term liabilities and equity of the business.
  • Free Cash Flow= Net Cash Provided by Operating Activities - Capital Expenditures- Cash Dividends
0:0:1



Answered

Not Answered

Not Visited
Correct : 0
Incorrect : 0