Question
Will give thumbs up if correct: Joyner Companys income statement for Year 2 follows: Sales $ 715,000 Cost of goods sold 182,000 Gross margin 533,000
Will give thumbs up if correct:
Joyner Companys income statement for Year 2 follows:
Sales | $ 715,000 |
---|---|
Cost of goods sold | 182,000 |
Gross margin | 533,000 |
Selling and administrative expenses | 150,400 |
Net operating income | 382,600 |
Nonoperating items: | |
Gain on sale of equipment | 6,000 |
Income before taxes | 388,600 |
Income taxes | 116,580 |
Net income | $ 272,020 |
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
Year 2 | Year 1 | |
---|---|---|
Assets | ||
Cash | $ 268,020 | $ 103,300 |
Accounts receivable | 224,000 | 114,000 |
Inventory | 319,000 | 272,000 |
Prepaid expenses | 8,500 | 17,000 |
Total current assets | 819,520 | 506,300 |
Property, plant, and equipment | 620,000 | 517,000 |
Less accumulated depreciation | 166,100 | 130,900 |
Net property, plant, and equipment | 453,900 | 386,100 |
Loan to Hymans Company | 45,000 | 0 |
Total assets | $ 1,318,420 | $ 892,400 |
Liabilities and Stockholders' Equity | ||
Accounts payable | $ 315,000 | $ 266,000 |
Accrued liabilities | 47,000 | 52,000 |
Income taxes payable | 84,400 | 80,400 |
Total current liabilities | 446,400 | 398,400 |
Bonds payable | 193,000 | 119,000 |
Total liabilities | 639,400 | 517,400 |
Common stock | 345,000 | 282,000 |
Retained earnings | 334,020 | 93,000 |
Total stockholders' equity | 679,020 | 375,000 |
Total liabilities and stockholders' equity | $ 1,318,420 | $ 892,400 |
Equipment that had cost $31,700 and on which there was accumulated depreciation of $11,000 was sold during Year 2 for $26,700. 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.
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