Joyner Company’s income statement for Year 2 follows:
Sales | $ | 714,000 |
Cost of goods sold | 84,000 | |
Gross margin | 630,000 | |
Selling and administrative expenses | 217,000 | |
Net operating income | 413,000 | |
Nonoperating items: | ||
Gain on sale of equipment | 7,000 | |
Income before taxes | 420,000 | |
Income taxes | 126,000 | |
Net income | $ | 294,000 |
Its balance sheet amounts at the end of Years 1 and 2 are as follows:
Year 2 | Year 1 | ||||
Assets | |||||
Cash and cash equivalents | $ | 234,000 | $ | 69,900 | |
Accounts receivable | 250,000 | 114,000 | |||
Inventory | 319,000 | 287,000 | |||
Prepaid expenses | 11,000 | 22,000 | |||
Total current assets | 814,000 | 492,900 | |||
Property, plant, and equipment | 635,000 | 504,000 | |||
Less accumulated depreciation | 165,300 | 130,600 | |||
Net property, plant, and equipment | 469,700 | 373,400 | |||
Loan to Hymans Company | 47,000 | 0 | |||
Total assets | $ | 1,330,700 | $ | 866,300 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 313,000 | $ | 257,000 | |
Accrued liabilities | 43,000 | 52,000 | |||
Income taxes payable | 85,100 | 81,300 | |||
Total current liabilities | 441,100 | 390,300 | |||
Bonds payable | 206,000 | 109,000 | |||
Total liabilities | 647,100 | 499,300 | |||
Common stock | 331,000 | 274,000 | |||
Retained earnings | 352,600 | 93,000 | |||
Total stockholders' equity | 683,600 | 367,000 | |||
Total liabilities and stockholders' equity | $ | 1,330,700 | $ | 866,300 | |
Equipment that had cost $30,000 and on which there was accumulated depreciation of $10,700 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 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.
Complete this question by entering your answers in the tabs below.
Using the indirect method, compute the net cash provided by/used in operating activities for Year 2. (List any deduction in cash outflows as negative amounts.)
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Complete this question by entering your answers in the tabs below.
Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)
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Complete this question by entering your answers in the tabs below.
Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.)
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Answer-1)-
JOYNER COMPANY | ||
STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD) | ||
FOR THE YEAR 2 | ||
Particulars | Amount | |
$ | ||
Cash flow from operating activities | ||
Net Income | 294000 | |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Adjustment for non cash effects | ||
Depreciation | ($165300+$10700-$130600) | 45400 |
Gain on sale of equipment | -7000 | |
Change in operating assets & liabilities | ||
Increase in accounts receivable | -136000 | |
Increase in inventories | -32000 | |
Decrease in prepaid expenses | 11000 | |
Increase in accounts payable | 56000 | |
Decrease in accrued liabilities | -9000 | |
Increase in income taxes payable | 3800 | |
Net cash flow from operating activities | 226200 |
2)-
JOYNER COMPANY | ||
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD) | ||
FOR THE YEAR 2 | ||
Particulars | Amount | |
$ | ||
Cash flow from operating activities (a) | 226200 |
Cash Flow from Investing activities | ||
New equipment purchased | ($635000+$30000-$504000) | -161000 |
Old equipment sold | 26300 | |
Net cash Flow from Investing activities (b) | -134700 | |
Cash Flow from Financing activities | ||
Loan to Hymans company | -47000 | |
Issued common stock | 57000 | |
Cash dividends paid | ($93000+$294000-$352600) | -34400 |
Bonds issued | 97000 | |
Net cash Flow from Financing activities (c) | 72600 | |
Net Change in cash c=a+b+c | 164100 | |
Beginning cash balance | 69900 | |
Closing cash balance | 234000 |
3)- Free cash flow = Net cash provided by operating activities- Capital expenditure-Cash dividends paid
= $226200-$161000-$34400
= $30800
Joyner Company’s income statement for Year 2 follows: Sales $ 714,000 Cost of goods sold 84,000...
Joyner Company's income statement for Year 2 follows: Sales Cost of goods sold Gros margin Selling and administrative expenses Net operating income Nonoperating items: Cain on sale of equipment Incone before taxes Income taxes Net Income $ 719,000 166,000 553,000 217.000 336,000 7,000 343,000 137,200 $ 205,800 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year $ 153,900 277.000 320,000 9.000 759,900 627,000 165,000 462,000 46,000 $1,267,900 $ 73, 700 132.000...
Joyner Company’s income statement for Year 2 follows: Sales $ 713,000 Cost of goods sold 287,000 Gross margin 426,000 Selling and administrative expenses 218,000 Net operating income 208,000 Nonoperating items: Gain on sale of equipment 5,000 Income before taxes 213,000 Income taxes 85,200 Net income $ 127,800 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash $ 54,600 $ 45,900 Accounts receivable 276,000 135,000 Inventory 320,000 287,000 Prepaid...
Joyner Company’s income statement for Year 2 follows: Sales $ 714,000 Cost of goods sold 365,000 Gross margin 349,000 Selling and administrative expenses 217,000 Net operating income 132,000 Nonoperating items: Gain on sale of equipment 9,000 Income before taxes 141,000 Income taxes 56,400 Net income $ 84,600 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash $ 33,400 $ 81,600 Accounts receivable 262,000 110,000 Inventory 319,000 276,000 Prepaid...
Joyner Company’s income statement for Year 2 follows: Sales $ 711,000 Cost of goods sold 320,000 Gross margin 391,000 Selling and administrative expenses 217,000 Net operating income 174,000 Nonoperating items: Gain on sale of equipment 7,000 Income before taxes 181,000 Income taxes 54,300 Net income $ 126,700 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash $ 54,100 $ 89,800 Accounts receivable 278,000 120,000 Inventory 320,000 272,000 Prepaid...
Joyner Company's Income statement for Year 2 follows: Sales Cast of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Gain on sale of equipment $ 705,ee0 114,080 591,000 218,0e0 373,000 6,000 379,000 113,700 s 265,300 Income before taxes Income taxes Net income Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents Accounts receivable Inventory Prepaid expenses Total current assets $...
Joyner Company's income statement for Year 2 follows: $900,000 500,000 400,000 328,000 72,000 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 8.000 80,000 24,000 $ 56,000 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 $ 4,000 250,000 310,000 7.000 571,009 510,000 132,000 378,000 40,000 $989,000 $ 21,000 170,000 260,000...
Joyner Company's income statement for Year 2 follows: $ 700,000 329,000 371,000 216,000 155,000 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 7,000 162,000 48,600 $ 113,400 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year i $ 60, 700 264,000 319,000 10,500 654,200 627,000 166,900 460,100 42,000 $1,156,300...
Joyner Company’s income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 230,000 Gross margin 488,000 Selling and administrative expenses 218,000 Net operating income 270,000 Nonoperating items: Gain on sale of equipment 7,000 Income before taxes 277,000 Income taxes 83,100 Net income $ 193,900 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents $ 123,100 $ 43,500 Accounts receivable 260,000 148,000 Inventory...
Joyner Company’s income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 43,000 Gross margin 675,000 Selling and administrative expenses 218,000 Net operating income 457,000 Nonoperating items: Gain on sale of equipment 8,000 Income before taxes 465,000 Income taxes 139,500 Net income $ 325,500 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents $ 285,100 $ 78,400 Accounts receivable 255,000 124,000 Inventory...
Joyner Company’s income statement for Year 2 follows: Sales $ 715,000 Cost of goods sold 182,000 Gross margin 533,000 Selling and administrative expenses 218,000 Net operating income 315,000 Nonoperating items: Gain on sale of equipment 8,000 Income before taxes 323,000 Income taxes 129,200 Net income $ 193,800 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents $ 143,500 $ 91,000 Accounts receivable 274,000 123,000 Inventory...