Waterways prepared the balance sheet and income statement for the irrigation installation division for last year. Now the company needs to prepare a cash flow statement for the same division. The comparative balance sheets for Waterways Corporation’s Irrigation Installation Division for last year and the prior year and the income statement for last year are presented below. (Note: Work in Process is a current asset and should be treated as any other current asset.) Additional information: 1. Waterways sold a piece of company equipment for $30,000. The equipment had been used for six years. It had cost $100,000 when purchases and had a 10-years life and a $10,000 salvage value. Straight-line depreciation was used. 2. Waterways purchased new equipment costing $200,000. 3. The division paid $100,000 in dividends. Waterways Corporation - Installation Division Income Statement For the Year Ending December 31, Last Year Sales $5,536,077 Less: Cost of goods sold 3,132,777 Gross Profit 2,403,300 Operating expenses: Advertising $52,000 Insurance 382,000 Salaries and wages 594,650 Depreciation 72,500 Other operating expenses 30,500 Total operating expenses 1,131,650 Income from operations 1,271,650 Other income Loss on sale of equip (16,000) Other expenses Interest expense (12,200) Net other income and expenses (28,200) Income before income tax 1,243,450 Income tax expenses 373,035 Net income $870,415 Waterways Corporation - Installation Division Balance Sheet December 31 Assets Last Year Prior Year Current assets Cash $792,306 $746,681 Accounts receivable 680,750 542,685 Work in process 680,450 0 Inventory 16,750 7,500 Prepaid expenses 71,500 42,590 Total current assets 2,241,756 1,339,456 Property, plant, and equipment Furnishings 40,416 40,416 Equipment 900,200 800,200 Buildings 450,000 450,000 Land 300,000 300,000 Accumulated depreciation (503,704) (485,204) Total property, plant, and equipment 1,186,912 1,105,412 Total Assets $3,428,668 $2,444,868 Liabilities and Stockholders\' Equity Current liabilities Accounts payable $156,300 $128,360 Income taxes payable 100,344 79,989 Wages payable 600 1,984 Interest payable 1,200 0 Other current liabilities 14,520 15,246 Revolving bank loan payable 16,000 0 Total current liabilities 288,964 225,579 Long-term liabilities Notes payable 150,000 0 Total liabilities 438,964 225,579 Stockholders\' equity Common stock 1,250,000 1,250,000 Retained earnings 1,739,704 969,289 Total stockholders\' equity 2,989,704 2,219,289 Total liabilities and stockholders\' equity $3,428,668 $2,444,868 Instructions: For last year: a. Prepare a statement of cash flow using the indirect method. b. Determine free cash flow. Waterways Corporation - Installation Division Income Statement For the Year Ending December 31, Last Year Sales $5,536,077 Less: Cost of goods sold 3,132,777 Gross Profit 2,403,300 Operating expenses: Advertising $52,000 Insurance 382,000 Salaries and wages 594,650 Depreciation 72,500 Other operating expenses 30,50.

1. What is the connection between relative frequency and probability
Solution
Relative frequency = no. of times an item occurs / total number of items
Probability = no. of times an event occurs / total number of events
Relative frequency can be equal to probability if, the set of events are exhaustive (i.e. sum of
probabilities = 1) and are mutually exclusive (i.e no overlap)
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