Explore BrainMass

Preparation of a statement of cash flows

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.
2008 2007

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

Additional information:
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.

Solution Summary

The solution prepares Statement of Cash Flows in excel format for Garcia Corporation.