Question
Joyner Companys income statement for Year 2 follows: Sales $ 719,000 Cost of goods sold 177,000 Gross margin 542,000 Selling and administrative expenses 216,000 Net
Joyner Companys income statement for Year 2 follows:
Sales | $ | 719,000 |
Cost of goods sold | 177,000 | |
Gross margin | 542,000 | |
Selling and administrative expenses | 216,000 | |
Net operating income | 326,000 | |
Nonoperating items: | ||
Gain on sale of equipment | 6,000 | |
Income before taxes | 332,000 | |
Income taxes | 132,800 | |
Net income | $ | 199,200 |
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
Year 2 | Year 1 | ||||
Assets | |||||
Cash and cash equivalents | $ | 137,800 | $ | 32,000 | |
Accounts receivable | 278,000 | 145,000 | |||
Inventory | 319,000 | 285,000 | |||
Prepaid expenses | 9,000 | 18,000 | |||
Total current assets | 743,800 | 480,000 | |||
Property, plant, and equipment | 621,000 | 519,000 | |||
Less accumulated depreciation | 165,000 | 131,500 | |||
Net property, plant, and equipment | 456,000 | 387,500 | |||
Loan to Hymans Company | 48,000 | 0 | |||
Total assets | $ | 1,247,800 | $ | 867,500 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 317,000 | $ | 262,000 | |
Accrued liabilities | 47,000 | 52,000 | |||
Income taxes payable | 84,200 | 80,500 | |||
Total current liabilities | 448,200 | 394,500 | |||
Bonds payable | 203,000 | 103,000 | |||
Total liabilities | 651,200 | 497,500 | |||
Common stock | 334,000 | 275,000 | |||
Retained earnings | 262,600 | 95,000 | |||
Total stockholders' equity | 596,600 | 370,000 | |||
Total liabilities and stockholders' equity | $ | 1,247,800 | $ | 867,500 | |
Equipment that had cost $30,500 and on which there was accumulated depreciation of $11,400 was sold during Year 2 for $25,100. 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.)
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Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)
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compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.)
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