Joyner Companys income statement for Year 2 follows:

Sales	$	708,000
Cost of goods sold		177,000
Gross margin		531,000
Selling and administrative expenses		151,100
Net operating income		379,900
Nonoperating items:
Gain on sale of equipment		9,000
Income before taxes		388,900
Income taxes		155,560
Net income	$	233,340

Its balance sheet amounts at the end of Years 1 and 2 are as follows:

	Year 2			Year 1
Assets
Cash	$	191,240		$	113,700
Accounts receivable		274,000			116,000
Inventory		318,000			285,000
Prepaid expenses		10,000			20,000
Total current assets		793,240			534,700
Property, plant, and equipment		624,000			502,000
Less accumulated depreciation		165,800			131,800
Net property, plant, and equipment		458,200			370,200
Loan to Hymans Company		50,000			0
Total assets	$	1,301,440		$	904,900
Liabilities and Stockholders' Equity
Accounts payable	$	316,000		$	270,000
Accrued liabilities		45,000			55,000
Income taxes payable		84,200			80,900
Total current liabilities		445,200			405,900
Bonds payable		209,000			114,000
Total liabilities		654,200			519,900
Common stock		349,000			290,000
Retained earnings		298,240			95,000
Total stockholders' equity		647,240			385,000
Total liabilities and stockholders' equity	$	1,301,440		$	904,900

Equipment that had cost $30,600 and on which there was accumulated depreciation of $10,000 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.

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:
		0
Financing activities:
		0
		0
Beginning cash and cash equivalents
Ending cash and cash equivalents		$0

Equipment that had cost $30,600 and on which there was accumulated depreciation of $10,000 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.

rev: 03_23_2020_QC_CS-199313

	Free cash flow