Megan Corporation's net income last year was $98,000. Changes in the company's balance sheet accounts for the year appear below:
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Asset Contra-Asset Accounts:
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Cash...................................
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$(3,000)
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Accounts receivable.................
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$(14,000)
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Inventory.............................
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$3,000
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Prepaid expenses.....................
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$(7,000)
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Long-term investments..............
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$80,000
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Property, plant and equipment.....
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$55,000
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Accumulated depreciation.........
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$58,000
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Liability and Equity Accounts:
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Accounts payable....................
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$0
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Accrued liabilities...................
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$15,000
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Income taxes payable...............
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$(11,000)
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Bonds payable........................
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$(30,000)
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Common stock.......................
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$20,000
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Retained earnings...................
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$62,000
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The company paid a cash dividend of $36,000 and it did not dispose of any long-term investments or property, plant, and equipment. The company did not issue any bonds payable or repurchase any of its own common stock. The following questions pertain to the company's statement of cash flows.
- The free cash flow for the year was:
- $123,000
- $87,000
- 142,000
- 269,000
2. In a statement of cash flows, which of the following would be classified as an investing activity?
- The sale of the company's own common stock for cash
- The sale of equipment
- Interest paid to a lender
- The issuance of bonds payable