Question
1. Joyner Companys income statement for Year 2 follows: Sales $ 715,000 Cost of goods sold 59,000 Gross margin 656,000 Selling and administrative expenses 150,200
1. Joyner Companys income statement for Year 2 follows:
Sales | $ | 715,000 |
Cost of goods sold | 59,000 | |
Gross margin | 656,000 | |
Selling and administrative expenses | 150,200 | |
Net operating income | 505,800 | |
Nonoperating items: | ||
Gain on sale of equipment | 6,000 | |
Income before taxes | 511,800 | |
Income taxes | 204,720 | |
Net income | $ | 307,080 |
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
Year 2 | Year 1 | ||||
Assets | |||||
Cash | $ | 280,380 | $ | 77,800 | |
Accounts receivable | 228,000 | 126,000 | |||
Inventory | 320,000 | 279,000 | |||
Prepaid expenses | 10,000 | 20,000 | |||
Total current assets | 838,380 | 502,800 | |||
Property, plant, and equipment | 624,000 | 509,000 | |||
Less accumulated depreciation | 166,200 | 130,400 | |||
Net property, plant, and equipment | 457,800 | 378,600 | |||
Loan to Hymans Company | 43,000 | 0 | |||
Total assets | $ | 1,339,180 | $ | 881,400 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 317,000 | $ | 264,000 | |
Accrued liabilities | 41,000 | 50,000 | |||
Income taxes payable | 84,900 | 80,400 | |||
Total current liabilities | 442,900 | 394,400 | |||
Bonds payable | 190,000 | 113,000 | |||
Total liabilities | 632,900 | 507,400 | |||
Common stock | 343,000 | 284,000 | |||
Retained earnings | 363,280 | 90,000 | |||
Total stockholders' equity | 706,280 | 374,000 | |||
Total liabilities and stockholders' equity | $ | 1,339,180 | $ | 881,400 | |
Equipment that had cost $31,600 and on which there was accumulated depreciation of $10,300 was sold during Year 2 for $27,300. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock.
Required:
1. Using the indirect method, compute the net cash provided by/used in operating activities for Year 2.
2. Prepare a statement of cash flows for Year 2.
3. Compute the free cash flow for Year 2.
Required 1 Required 2 Required 3 Using the indirect method, compute the net cash provided by/used in operating activities for Year 2. (List any deduction in cash outflows as negative amounts.) Joyner Company Statement of Cash Flows-Indirect Method (partial) 0 $ 0 Statement of Cash Flows For Year 2 Operating activities: Investing activities: 0 Financing activities: 0 0 Beginning cash and cash equivalents Ending cash and cash equivalents $ 0 Required 1 Required 2 Required 3 Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.) Free cash flowStep by Step Solution
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