50.1K

Verified Solution

Link Copied!

The income statement for the year ended December 31, 2017, for Sheffield Manufacturing Company contains the following condensed information. $6,586,000 SHEFFIELD CO. INCOME STATEMENT Revenues Operating expenses (excluding depreciation) $4,923,000 Depreciation expense 873,000 Income before income tax Income tax expense Net income 5,796,000 790,000 355,500 $ 434,500 Included in operating expenses is a $34,000 loss resulting from the sale of machinery for $273,000 cash. The company purchased machinery at a cost of $743,000. Sheffield reports the following balances on its comparative balance sheets at December 31. SHEFFIELD CO. COMPARATIVE BALANCE SHEETS (PARTIAL) 2017 2016 Cash $667,500 $133,000 Accounts receivable 788,000 613,000 Inventory 835,500 874,000 Accounts payable 526,500 514,000 Income tax expense of $355,500 represents the amount paid in 2017. Dividends declared and paid in 2017 totaled $213,000. Prepare the statement of cash flows using the indirect method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) SHEFFIELD COMPANY Statement of Cash Flows For the Year Ended December 31, 2017 | Cash Flows from Operating Activities Net Income $ 434,500 Adjustments to reconcile net income to Cash Flows from Operating Activities Depreciation Expense 873,000 " Loss on Sale of Machinery 34,000 Decrease in Accounts Receivable Increase in Accounts Payable Net Cash Provided by Operating Activities ) Sheffield has an aggressive growth plan, which will require significant investments in plant and equipment over the next several years. Preliminary plans call for an investment of over $500,000 in the next year. Compute Sheffield's free cash flow. Free cash flow $

Answer & Explanation Solved by verified expert

See Answer