Condensed Financial Data of Shannon Corporation Appear Below: Additional

question 37

Essay

Condensed financial data of Shannon Corporation appear below: Additional information:
1. New equipment costing $85,000 was purchased for cash in 2014.
2. Old equipment costing $25,000 was sold for $10,000 cash when carrying amount was $13,000.
3. Bonds with a face value of $20,000 were converted into $20,000 of common shares.
4. A cash dividend of $24,000 was declared and paid during the year.
5. Accounts payable pertain to merchandise purchases.
Instructions
a. Prepare a cash flow statement for the year, using the direct method.
b. Calculate free cash flow.

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Definitions:

Risk

The possibility of loss, damage, or any other undesirable event.

Return

The profit or loss derived from an investment over a particular period, expressed either in percentage or absolute terms.

Tradeoff

A decision situation that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects.

Standard Deviation

A measure of the dispersion or variability in a set of data points, indicating how much the observations differ from the mean of the data set.