Preparation of a Statement of Cash Flows- Presented below is a condensed version of the comparative
balance sheets for Garcia Corporation for the last two years at December 31.
Cash $442,500 $195,000
Accounts receivable 450,000 462,500
Investments 130,000 185,000
Equipment 745,000 600,000
Less: Accumulated depreciation (265,000) (222,500)
Current liabilities 335,000 377,500
Capital stock 400,000 400,000
Retained earnings 767,500 442,500
Investments were sold at a loss (not extraordinary) of $25,000; no equipment was sold; cash dividends paid were
$75,000; and net income was $400,000.
(a) Prepare a statement of cash flows for 2008 for Garcia Corporation.
(b) Determine Garcia Corporationâ??s free cash flow.
The solution prepares Statement of Cash Flows in excel format for Garcia Corporation.