Comparative financial statement data for Carmono Company follow: This Year Last Year Assets Cash $ 5.00 $ 9.00 Accounts receivable 40.00 33.00 Inventory 80.00 66.20 Total current assets 125.00 108.20 Property, plant, and equipment 216.00 184.00 Less accumulated depreciation 41.60 31.20 Net...

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Accounting

Comparative financial statement data for Carmono Companyfollow:
This Year Last Year
Assets
Cash $ 5.00 $ 9.00
Accounts receivable 40.00 33.00
Inventory 80.00 66.20
Total current assets 125.00 108.20
Property, plant, andequipment 216.00 184.00
Less accumulateddepreciation 41.60 31.20
Net property, plant, andequipment 174.40 152.80
Total assets $ 299.40 $ 261.00
Liabilities andStockholders’ Equity
Accounts payable $ 48.00 $ 41.00
Common stock 98.00 76.00
Retained earnings 153.40 144.00
Total liabilities andstockholders’ equity $ 299.40 $ 261.00
For this year, the company reported net income as follows:
Sales $ 600.00
Cost of goods sold 360.00
Gross margin 240.00
Selling and administrativeexpenses 220.00
Net income $ 20.00
This year Carmono declared and paid a cash dividend. There wereno sales of property, plant, and equipment during this year. Thecompany did not repurchase any of its own stock this year.
Required:
1. Using the indirect method, prepare a statement of cash flowsfor this year.
2. Compute Carmono’s free cash flow for this year.

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Solution 1 Carmono Company Statement of Cash Flows For This Year Particulars Details Amount Cash Flow from Operating Activities Net Income 2000 Adjustments to reconcile net See Answer

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Comparative financial statement data for Carmono Companyfollow:This YearLast YearAssetsCash$5.00$9.00Accounts receivable40.0033.00Inventory80.0066.20Total current assets125.00108.20Property, plant, andequipment216.00184.00Less accumulateddepreciation41.6031.20Net property, plant, andequipment174.40152.80Total assets$299.40$261.00Liabilities andStockholders’ EquityAccounts payable$48.00$41.00Common stock98.0076.00Retained earnings153.40144.00Total liabilities andstockholders’ equity$299.40$261.00For this year, the company reported net income as follows:Sales$600.00Cost of goods sold360.00Gross margin240.00Selling and administrativeexpenses220.00Net income$20.00This year Carmono declared and paid a cash dividend. There wereno sales of property, plant, and equipment during this year. Thecompany did not repurchase any of its own stock this year.Required:1. Using the indirect method, prepare a statement of cash flowsfor this year.2. Compute Carmono’s free cash flow for this year.

	This Year		Last Year
Assets
Cash	$	5.00	$	9.00
Accounts receivable		40.00		33.00
Inventory		80.00		66.20
Total current assets		125.00		108.20
Property, plant, andequipment		216.00		184.00
Less accumulateddepreciation		41.60		31.20
Net property, plant, andequipment		174.40		152.80
Total assets	$	299.40	$	261.00
Liabilities andStockholders’ Equity
Accounts payable	$	48.00	$	41.00
Common stock		98.00		76.00
Retained earnings		153.40		144.00
Total liabilities andstockholders’ equity	$	299.40	$	261.00


Sales	$	600.00
Cost of goods sold		360.00
Gross margin		240.00
Selling and administrativeexpenses		220.00
Net income	$	20.00