Presented below are the financial statements of Gaudette Company. Additional information: 1. Dividends of $33,000 were declared

Question:

Presented below are the financial statements of Gaudette Company.

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Additional information:

1. Dividends of $33,000 were declared and paid. Gaudette reports under ASPE.

2. During the year, equipment was sold for $10,000 cash. This equipment cost $13,000 originally and had a carrying value of $10,000 at the time of sale.

3. All depreciation expense, $6,000, is in the selling expense category.

4. All sales and purchases are on account.

5. Additional equipment was purchased for $5,000 cash.

Instructions

a. Prepare a statement of cash fl ows using the indirect method.

b. Calculate free cash flow.

Taking It Further

Gaudette Company had a positive cash balance at the beginning and end of 2021. Given that, is it possible that the company could have had a negative cash balance at one or more points during the year? Explain.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
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Related Book For  book-img-for-question

Accounting Principles Volume 2

ISBN: 978-1119502555

8th Canadian Edition

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

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