Question
Joyner Companys income statement for Year 2 follows: Sales $ 701,000 Cost of goods sold 228,000 Gross margin 473,000 Selling and administrative expenses 217,000 Net
Joyner Companys income statement for Year 2 follows:
Sales | $ | 701,000 |
Cost of goods sold | 228,000 | |
Gross margin | 473,000 | |
Selling and administrative expenses | 217,000 | |
Net operating income | 256,000 | |
Nonoperating items: | ||
Gain on sale of equipment | 7,000 | |
Income before taxes | 263,000 | |
Income taxes | 78,900 | |
Net income | $ | 184,100 |
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
Year 2 | Year 1 | ||||
Assets | |||||
Cash | $ | 151,300 | $ | 103,500 | |
Accounts receivable | 256,000 | 119,000 | |||
Inventory | 320,000 | 282,000 | |||
Prepaid expenses | 10,000 | 20,000 | |||
Total current assets | 737,300 | 524,500 | |||
Property, plant, and equipment | 633,000 | 508,000 | |||
Less accumulated depreciation | 166,100 | 130,800 | |||
Net property, plant, and equipment | 466,900 | 377,200 | |||
Loan to Hymans Company | 44,000 | 0 | |||
Total assets | $ | 1,248,200 | $ | 901,700 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 312,000 | $ | 269,000 | |
Accrued liabilities | 49,000 | 55,000 | |||
Income taxes payable | 84,800 | 81,700 | |||
Total current liabilities | 445,800 | 405,700 | |||
Bonds payable | 207,000 | 114,000 | |||
Total liabilities | 652,800 | 519,700 | |||
Common stock | 345,000 | 285,000 | |||
Retained earnings | 250,400 | 97,000 | |||
Total stockholders' equity | 595,400 | 382,000 | |||
Total liabilities and stockholders' equity | $ | 1,248,200 | $ | 901,700 | |
Equipment that had cost $30,400 and on which there was accumulated depreciation of $10,300 was sold during Year 2 for $27,100. 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.
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.) Weaver Company Statement of Cash Flows-Indirect Method (partial) 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 Investing activities Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.) Free cash flow
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