Reference no: EM132945475

Question - TENER CORPORATION Comparative Balance Sheet

2008 2007

Assets

Cash $36,000 $31,000

Accounts receivable (net) 80,000 60,000

Prepaid insurance 25,000 17,000

Land 18,000 40,000

Equipment 70,000 60,000

Accumulated depreciation (20,000) (13,000)

Total assets $209,000 $195,000

Liabilities and Stockholders' Equity

Accounts payable $11,000 $6,000

Bonds payable 27,000 19,000

Common stock 140,000 115,000

Retained earnings 31,000 55,000

Total liabilities and stockholders' equity $209,000 $195,000

Additional information:

1. Net loss for 2008 is $15,000.

2. Cash dividends of $9,000 were declared and paid in 2008.

3. Land was sold for cash at a loss of $7,000. This was the only land transaction during the year.

4. Equipment with a cost of $15,000 and accumulated depreciation of $10,000 was sold for $5,000 cash.

5. Acquisition of WSD, net of cash and cash equivalents acquired $15000.

6. $12,000 of bonds were retired during the year at carrying (book) value.

7. Collection of principal on long-term loan to a supplier $15,000.

8. Equipment was acquired for common stock. The fair market value of the stock at the time of the exchange was $25,000.

Required -

a) Prepare a statement of cash flows for the year ended 2008, using the indirect method.

b) Calculate the free cash flow and comment on it.