Question
Help, thanks in advance. Joyner Companys income statement for Year 2 follows: Sales $ 706,000 Cost of goods sold 354,000 Gross margin 352,000 Selling and
Help, thanks in advance.
Joyner Companys income statement for Year 2 follows:
Sales | $ | 706,000 |
Cost of goods sold | 354,000 | |
Gross margin | 352,000 | |
Selling and administrative expenses | 151,800 | |
Net operating income | 200,200 | |
Nonoperating items: | ||
Gain on sale of equipment | 8,000 | |
Income before taxes | 208,200 | |
Income taxes | 83,280 | |
Net income | $ | 124,920 |
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
Year 2 | Year 1 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 109,920 | $ | 59,300 | |||||||
Accounts receivable | 226,000 | 129,000 | |||||||||
Inventory | 320,000 | 285,000 | |||||||||
Prepaid expenses | 10,500 | 21,000 | |||||||||
Total current assets | 666,420 | 494,300 | |||||||||
Property, plant, and equipment | 633,000 | 516,000 | |||||||||
Less accumulated depreciation | 165,800 | 130,000 | |||||||||
Net property, plant, and equipment | 467,200 | 386,000 | |||||||||
Loan to Hymans Company | 45,000 | 0 | |||||||||
Total assets | $ | 1,178,620 | $ | 880,300 | |||||||
Liabilities and Stockholders' Equity | |||||||||||
Accounts payable | $ | 314,000 | $ | 262,000 | |||||||
Accrued liabilities | 50,000 | 51,000 | |||||||||
Income taxes payable | 84,700 | 80,300 | |||||||||
Total current liabilities | 448,700 | 393,300 | |||||||||
Bonds payable | 207,000 | 106,000 | |||||||||
Total liabilities | 655,700 | 499,300 | |||||||||
Common stock | 333,000 | 285,000 | |||||||||
Retained earnings | 189,920 | 96,000 | |||||||||
Total stockholders' equity | 522,920 | 381,000 | |||||||||
Total liabilities and stockholders' equity | $ | 1,178,620 | $ | 880,300 | |||||||
Equipment that had cost $31,600 and on which there was accumulated depreciation of $11,700 was sold during Year 2 for $27,900. 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 the Year 2. Prepare a statement of cash flows for Year 2. 3. Compute the free cash flow for Year 2.
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