Joyner Company's income statement for Year 2 follows: Joyner Company's Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of equipment Income before taxes Income taxes Net income $782,000 405,000 377,000 238,000 139,000 10,000 149,000 44,700 $104,300 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Its balance sheet amounts at the end of Years 1 and 2 are as follows: Joyner Company's Balance Sheet Year 2 Year 1 $ 66,100 $ 188,200 276,000 135,000 320,000 274,000 10,500 21,000 672,600 618,200 550,000 384,000 167,000 131,600 383,000 252,400 96,000 $1,151,600 $870,600 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment Less accumulated depreciation Net property, plant, and equipment Loan to Hymans Company Total assets Liabilities and Stockholders' Equity Accounts payable Accrued liabilities Income taxes payable Total current liabilities Bonds payable Total liabilities Common stock Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 314,000 267,000 45,000 51,000 85,200 80,600 444,200 398,600 193,000 103,000 637,200 501,600 345,000 271,000 169,400 98,000 514,400 369,000 $1,151,600 $870,600 Equipment that had cost $31,500 and on which there was accumulated depreciation of $11,200 was sold during Year 2 for $30,300. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock. Sam Conway, president of the company, considers $70,100 to be the minimum cash balance for operating purposes. As can be seen from the balance sheet data, only $66,100 in cash was available the end of the current year. The sharp decline is puzzling to Mr. Conway, particularly because sales an profits are at a record high. Required: 1. Using the direct method, adjust the company's income statement to a cash basis for Year 2. 2. Using the data from (1) above and other data from the problem as needed, prepare a statement of cash flows for Year 2. Using the direct method, adjust the company's income statement to a cash basis for Year be deducted should be indicated with a minus sign.) Joyner Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: Adjustments to a cash basis: Selling and administrative expenses Adjustments to a cash basis: Income taxes Adjustments to a cash basis: Joyner Company Statement of Cash Flows For Year 2 Operating activities: Cash received from customers Less cash disbursements for: Total cash disbursements Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents