The financial statements of Granger Inc. appear below: The following additional data were provided:
1. Dividends declared and paid were $14,000.
2. During the year, equipment was sold for $12,000 cash. This equipment cost $28,000 originally and had a carrying amount of $12,000 at the time of sale.
3. All depreciation expense is in the operating expenses category.
4. All sales and purchases are on account.
5. Accounts payable pertain to merchandise suppliers.
6. All operating expenses except for depreciation were paid in cash.
Instructions
a. Prepare a cash flow statement for Granger Inc., using the direct method.
b. Calculate free cash flow.

Question

The financial statements of Granger Inc. appear below:  The following additional data were provided:
1. Dividends declared and paid were $14,000.
2. During the year, equipment was sold for $12,000 cash. This equipment cost $28,000 originally and had a carrying amount of $12,000 at the time of sale.
3. All depreciation expense is in the operating expenses category.
4. All sales and purchases are on account.
5. Accounts payable pertain to merchandise suppliers.
6. All operating expenses except for depreciation were paid in cash.
Instructions
a. Prepare a cash flow statement for Granger Inc., using the direct method.
b. Calculate free cash flow.

Quizplus · Accepted Answer

The Answer of The financial statements of Granger Inc. appear below:  The following additional data were provided:
1. Dividends declared and paid were $14,000.
2. During the year, equipment was sold for $12,000 cash. This equipment cost $28,000 originally and had a carrying amount of $12,000 at the time of sale.
3. All depreciation expense is in the operating expenses category.
4. All sales and purchases are on account.
5. Accounts payable pertain to merchandise suppliers.
6. All operating expenses except for depreciation were paid in cash.
Instructions
a. Prepare a cash flow statement for Granger Inc., using the direct method.
b. Calculate free cash flow.

The Financial Statements of Granger Inc