Question
Joyner Companys income statement for Year 2 follows: Sales $ 715,000 Cost of goods sold 286,000 Gross margin 429,000 Selling and administrative expenses 217,000 Net
Joyner Companys income statement for Year 2 follows:
Sales | $ | 715,000 |
Cost of goods sold | 286,000 | |
Gross margin | 429,000 | |
Selling and administrative expenses | 217,000 | |
Net operating income | 212,000 | |
Nonoperating items: | ||
Gain on sale of equipment | 8,000 | |
Income before taxes | 220,000 | |
Income taxes | 88,000 | |
Net income | $ | 132,000 |
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
Year 2 | Year 1 | ||||
Assets | |||||
Cash | $ | 79,400 | $ | 70,000 | |
Accounts receivable | 265,000 | 144,000 | |||
Inventory | 319,000 | 277,000 | |||
Prepaid expenses | 10,500 | 21,000 | |||
Total current assets | 673,900 | 512,000 | |||
Property, plant, and equipment | 639,000 | 511,000 | |||
Less accumulated depreciation | 166,600 | 132,000 | |||
Net property, plant, and equipment | 472,400 | 379,000 | |||
Loan to Hymans Company | 43,000 | 0 | |||
Total assets | $ | 1,189,300 | $ | 891,000 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 316,000 | $ | 266,000 | |
Accrued liabilities | 45,000 | 50,000 | |||
Income taxes payable | 85,400 | 82,000 | |||
Total current liabilities | 446,400 | 398,000 | |||
Bonds payable | 200,000 | 116,000 | |||
Total liabilities | 646,400 | 514,000 | |||
Common stock | 348,000 | 284,000 | |||
Retained earnings | 194,900 | 93,000 | |||
Total stockholders' equity | 542,900 | 377,000 | |||
Total liabilities and stockholders' equity | $ | 1,189,300 | $ | 891,000 | |
Equipment that had cost $31,900 and on which there was accumulated depreciation of $10,000 was sold during Year 2 for $29,900. 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 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
Using the indirect method, compute the net cash provided by/used in operating activities for Year 2. (List any deduction in cash and cash outflows as negative amounts.)
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Required 2
Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)
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Required 3
Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.)
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