Question

Waterway Industries issued the following statement of cash flows for 2017. Waterway Industries Statement of Cash Flows—Indirect Method For the Year Ended December 31, 2017 Cash flows from operating activities Net income $158,769 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation expense $ 24,488 Decrease in accounts receivable 25,565 Increase in inventory (13,455 ) Decrease in accounts payable (5,920 ) Loss on disposal of plant assets 8,880 39,558 Net cash provided by operating activities 198,327 Cash flows from investing activities Sale of investments 8,342 Purchase of equipment (65,122 ) Net cash used by investing activities (56,780 ) Cash flows from financing activities Issuance of stock 53,820 Payment on long-term note payable (26,910 ) Payment for dividends (34,983 ) Net cash used by financing activities (8,073 ) Net increase in cash 133,474 Cash at beginning of year 34,983 Cash at end of year $168,457
(a) Compute free cash flow for Waterway Industries. (Show a negative free cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).) Free cash flow for Waterway Industries $enter Free cash flow for Waterway Industries in dollars LINK TO TEXT

Answer 1

Answer:

$98,222

Explanation:

The computation of the free cash flow is shown below:

= Cash flow from Operating activity - purchase of equipment - payment of dividend

= $198,327 - $65,122 - $34,983

= $98,222

Simply we deduct the purchase of equipment amount and the dividend payment from the cash flow from operating activity so that the accurate amount can come.

All other information which is given is not relevant. Hence, ignored it

The purchase of equipment is the capital expenditure