Reference no: EM132835053
Question - Presented below are the financial statements of Sheffield Company.
Sheffield Company Comparative Balance Sheets December 31
2022 2021
Assets
Cash $87,500 $50,000
Accounts receivable 50,000 35,000
Inventory 70,000 50,000
Property, plant, and equipment 150,000 195,000
Accumulated depreciation (80,000) (60,000)
Total $277,500 $270,000
Liabilities and Stockholders' Equity
Accounts payable $47,500 $37,500
Income taxes payable 17,500 20,000
Bonds payable 42,500 82,500
Common stock 45,000 35,000
Retained earnings 125,000 95,000
Total $277,500 $270,000
Sheffield Company Income Statement For the Year Ended December 31, 2022
Sales revenue $605,000
Cost of goods sold 437,500
Gross profit 167,500
Selling expenses $45,000
Administrative expenses 15,000 60,000
Income from operations 107,500
Interest expense 7,500
Income before income taxes 100,000
Income tax expense 20,000
Net income $80,000
Additional data:
1. Depreciation expense was $43,750.
2. Dividends declared and paid were $50,000.
3. During the year equipment was sold for $21,250 cash. This equipment cost $45,000 originally and had accumulated depreciation of $23,750 at the time of sale.
Required - Compute the free cash flow.