Condensed financial data of Shannon Corporation appear below: Additional information:
1. New equipment costing $85,000 was purchased for cash in 2014.
2. Old equipment costing $25,000 was sold for $10,000 cash when carrying amount was $13,000.
3. Bonds with a face value of $20,000 were converted into $20,000 of common shares.
4. A cash dividend of $24,000 was declared and paid during the year.
5. Accounts payable pertain to merchandise purchases.
Instructions
a. Prepare a cash flow statement for the year, using the direct method.
b. Calculate free cash flow.

Question

Condensed financial data of Shannon Corporation appear below:  Additional information:
1. New equipment costing $85,000 was purchased for cash in 2014.
2. Old equipment costing $25,000 was sold for $10,000 cash when carrying amount was $13,000.
3. Bonds with a face value of $20,000 were converted into $20,000 of common shares.
4. A cash dividend of $24,000 was declared and paid during the year.
5. Accounts payable pertain to merchandise purchases.
Instructions
a. Prepare a cash flow statement for the year, using the direct method.
b. Calculate free cash flow.

Quizplus · Accepted Answer

The Answer of Condensed financial data of Shannon Corporation appear below:  Additional information:
1. New equipment costing $85,000 was purchased for cash in 2014.
2. Old equipment costing $25,000 was sold for $10,000 cash when carrying amount was $13,000.
3. Bonds with a face value of $20,000 were converted into $20,000 of common shares.
4. A cash dividend of $24,000 was declared and paid during the year.
5. Accounts payable pertain to merchandise purchases.
Instructions
a. Prepare a cash flow statement for the year, using the direct method.
b. Calculate free cash flow.

Condensed Financial Data of Shannon Corporation Appear Below: Additional