14-10 Prepare a Statement of Cash Flows; Free Cash Flow [LO14-1, LO14-2, LO14-3] Joyner Company's income statement for Year 2 follows: Sales $714,000 Cost of goods sold 123,000 Gross margin 591,000 Selling and administrative expenses 151,600 Net operating income 439,400 Nonoperating items: Gain on sale of equipment 9,000 448,400 Income before taxes Income taxes Net income 134,520 $313,880 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Loan to Hymans Company Total assets Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Year 2 Year 1 $ 303,180 223,000 319,000 $ 82,700 146,000 271,000 10,000 20,000 855,180 519,700 622,000 505,000 165,100 130,400 456,900 374,600 46,000 0 $1,358,080 $894,300 $ 316,000 $261,000 42,000 57,000 84,700 80,300 442,700 398,300 204,000 115,000 646,700 513,300 338,000 290,000 373,380 91,000 711,380 381,000 $1,358,080 $894,300 Equipment that had cost $30,900 and on which there was accumulated depreciation of $10,300 was sold during Year 2 for $29,600. 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. Complete this question by entering your answers in the tabs below. 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) Net income $ 313,880 Adjustments to convert net income to a cash basis: Depreciation $ 45,000 Gain on sale of equipment (9,000) Increase in accounts receivable (77,000) Increase in inventory (48,000) Decrease in prepaid expenses 10,000 Increase in accounts payable 55,000 Decrease in accrued liabilities (15,000) Increase in income taxes payable 4,400 Net cash provided by operating activities Required 1 (34,600) $ 279,280 Required 2 > 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.) Joyner Company Statement of Cash Flows For Year 2 Operating activities: Net cash provided by operating activities Investing activities: Proceeds from sale of equipment Loan to Hymans Company Additions to property, plant, and equipment $ 29,600 (46,000) (147,900) Net cash used in investing activities Financing activities: Issuance of bonds payable 89,000 Issuance of common stock 48,000 Cash dividends paid (31,500) Net cash provided by financing activities Net increase in cash Beginning cash and cash equivalents Ending cash and cash equivalents $ 279,280 (164,300) 105,500 220,480 $ 220,480 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. Complete this question by entering your answers in the tabs below. 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 flow $ (16,400) < Required 2 Required 3 >