Question

Accounting Chapter 14 Help Pt.2

Problem 14-10 Prepare a Statement of Cash Flows; Free Cash Flow [LO14-1, L014-2, L014-3] Joyner Company's income statement for Year 2 follows Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: $ 713,000 308,000 405,000 216,000 189,000 Gain on sale of equipment Income before taxes Income taxes Net income 6,000 195,000 58,500 $136,500 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year2 Year 1 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipment $ 62,700 46,500 144,000 284,000 16,000 657,700490,500 518,000 131,500 268,000 319,000 8,000 622,000 165,100 Less accumulated depreciation Net property, plant, and equipment Loan to Hymans Company Total assets e900386,500 $1,164,600 $877,000 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 $ 313,000 $255, 000 55,000 81,000 391,000 199,000105,000 496,000 289,000 92,000 526,500381,000 $1,164,600 $877,000 41,000 85,100 439,100 638 100 332,000 194,500 Equipment that had cost $30,300 and on which there was accumulated depreciation of $10,500 was sold during Year 2 for $25,800. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock.

Answer 1

Req 1.
Cashflows from Operating activities
Net Income for the year				136500
Adjustment required for reconciling
Gain on sale of equipment				-6000
Depreciation (131500-10500-165100)				44100
Increase in Accounts receivable				-124000
Increase in Inventory				-35000
Decrease in Prepaid expense				8000
Increase in Accounts payable				58000
Decrease in Accrued liabilities				-14000
Increase in Income taxa payable				4100
Net cash provided from Operating activities				71700
Req 2.
Cash Flow Statement:
Cashflows from Operating activities:
Net cash provided from Operating activities				71700
Cashflows from Investing activities:
Sale of equipmemnt			25800
Purchase o Equipment			-134300
	(518000-30300-622000)
Loan given to Hyman			-50000
Net cash used in Investing activities				-158500
Cashflows from Financing activities
Bonds payable issued			94000
Issue of Common Stock			43000
Dividend paid			-34000
(92000+136500-194500)
Net cash provided from Financing activities				103000
Net Increase in cash				16200
Beginning balance of cash				46500
Ending balance of cash				62700
Req 3.
Net cash provided from Operating activities				71700
Less: Capital expenditure on PP&E				-134300
Net free cash flows				-62600