The Financial Statements of Granger Inc

question 83

Essay

The financial statements of Granger Inc. appear below: The following additional data were provided:
1. Dividends declared and paid were $14,000.
2. During the year, equipment was sold for $12,000 cash. This equipment cost $28,000 originally and had a carrying amount of $12,000 at the time of sale.
3. All depreciation expense is in the operating expenses category.
4. All sales and purchases are on account.
5. Accounts payable pertain to merchandise suppliers.
6. All operating expenses except for depreciation were paid in cash.
Instructions
a. Prepare a cash flow statement for Granger Inc., using the direct method.
b. Calculate free cash flow.

---

Definitions:

Inventory Loss

A reduction in inventory count due to theft, spoilage, or other discrepancies not related to sales.

Ceiling Constraint

The maximum limit or cap placed on the budget, price, or resources applicable within a project or operation.

Normal Profit Margin

The average amount by which a company's sales exceed its costs of goods sold and operating expenses, reflecting a typical level of profitability.

Transportation Costs

Expenses incurred by a company to move its products from the place of production to the place of sale.