The comparative balance sheets for Beckwith Products Company are presented below.

Additional information:
1. Net income for 2009 was $52,000.
2. Cash dividends of $16,000 were declared and paid during 2009.
3. During 2009, Beckwith issued $20,000 of notes payable and repaid $35,000 principal relating to notes payable.
4. Common stock was issued for $40,000 cash.
5. Depreciation expense was $10,000, and there were no disposals of equipment.

Required:
1. Prepare a statement of cash flows (indirect method) for Beckwith Products for 2009.
2. Compute the following cash-based performance measures:
a. Free cash flow
b. Cash flow adequacy (assume that the average amount of debt maturing over the next five years is $85,000).
3. List the major reasons for the difference between net income and net cash flow from operatingactivities.

Transcribed Image Text:

2009 2008 Assets: Cash Accounts receivable Inventory Property, plant, and equipment Accumulated depreciation 36400 63,000 45,300 221,000 (30,000) 25,000 78,000 36,000 153,000 (20,000) $272,000 Total assets Liabilities and Equity: Accounts payable Interest payable Wages payable Notes payable Common stock Retained earnings 13,100 13,500 4,100 75,000 90,000 140,000 11,000 8,000 9,000 90,000 50,000 104,000 $272,000 Total iabilities and equity