Prepare a statement of cash flows for year two

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Reference no: EM131889766

Assignment

Joyner Company's income statement for Year 2 follows:

Sales	715,000
Cost of goods sold	44,000
Gross margin	671,000
Selling and administrative expenses	218,000
Net operating income	453,000
Gain on sale of equipment	6,000
Income before taxes	459,000
Income taxes	137,700
Net income	321,300

	Year 2	Year 1
Assets
Cash	255,700	65,100
Accounts receivable	269,000	132,000
Inventory	319,000	276,000
Prepaid expenses	8,000	16,000
Total current assets	851,700	489,100
Property, plant, and equipment	636,000	513,000
Less accumulated depreciation	166,400	130,400
Net property, plant, and equipment	469,600	382,600
Loan to Hymans Company	46,000	0
Total assets	1,367,300	871,700
Liabilities and Stockholders' Equity
Accounts payable	318,000	258,000
Accrued liabilities	40,000	59,000
Income taxes payable	84,400	81,700
Total current liabilities	442,400	398,700
Bonds payable	201,000	111,000
Total liabilities	643,400	509,700
Common stock	345,000	270,000
Retained earnings	378,900	92,000
Total stockholders' equity	723,900	362,000
Total liabilities and stockholders' equity	1,367,300	871,700

Equipment that had cost $31,500 and on which there was accumulated depreciation of $11,200 was sold during Year 2 for $26,300. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock.

Required:

1. Using the indirect method, compute the net cash for operating activities for Year 2. (Negative amount should be indicated by a minus sign.)

2. Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)

3. Compute the free cash flow for Year 2.

Reference no: EM131889766

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