Evaluate jacksons cash flows for year

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Reference no: EM13533123

Preparing the statement of cash flows-indirect method, evaluating cash flows, and measuring free cash flows

The comparative balance sheet of Jackson Educational Supply at December 31,

2012, reported the following:

December 31,


2012

2011


Current assets:




Cash and cash equivalents

$ 88,200

$ 22,500


Accounts receivable

14,400

21,700


Inventories

63,600

60,400


Current liabilities:




Accounts payable .

28,600

27,100


Accrued liabilities .

10,600

11,200


Jackson's transactions during 2012 included the following:

Depreciation expense

$ 16,700

Payment of cash dividend

$ 17,200

Purchase of building

100,000

Purchase of equipment

54,400

Net income

59,600

Issuance of long-term note payable to borrow cash

50,000

Issuance of common stock for cash

106,000

Requirements

1. Prepare the statement of cash flows of Jackson Educational Supply for the year ended December 31, 2012. Use the indirect method to report cash flows from operating activities.

2. Evaluate Jackson's cash flows for the year. Mention all three categories of cash flows and give the reason for your evaluation.

3. If Jackson plans similar activity for 2013, what is its expected free cash flow?

Reference no: EM13533123

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