(Learning Objectives 4, 5, 6, 7: Preparing and analyzing a statement of cash fl ows—

direct method) Horse Heaven Farm began 20X6 with cash of $170,000. During the year, Horse Heaven earned service revenue of $590,000 and collected $480,000 from customers. Expenses for the year totaled $320,000, with $310,000 paid in cash to suppliers and employees. Horse Heaven also paid $136,000 to purchase equipment and a cash dividend of $49,000 to shareholders. During 20X6, Horse Heaven borrowed $26,000 by issuing a note payable. Prepare the company’s statement of cash fl ows for the year. Format operating activities by the direct method.

Calculate Horse’s free cash fl ow and cash realization ratio.