The comparative balance sheet of Jackson Educational Supply at December 31, 2018, reported the following:

Jackson's transactions during 2018 included the following:

Requirements
1. Prepare the statement of cash flows of Jackson Educational Supply for the year ended December 31, 2018. 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 2019, what is its expected free cash flow?

Transcribed Image Text:

2018 2017 Current Assets: $ 87,700 $ 23,500 Cash Accounts Receivable 15,300 22,000 Merchandise Inventory 60,400 62,600 Current Liabilities: Accounts Payable 28,100 26,100 Accrued Liabilities 10,600 11,300 Payment of cash dividends Purchase of equipment with cash Issuance of long-term notes payable to borrow cash Issuance of common stock for cash Depreciation expense $ 16,200 54,700 Purchase of building with cash 48,000 $ 16,700 98,000 Net income 57,600 105,000