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Joyner Company's income statement for Year 2 follows: $ 713,000 143,000 570.000 150,400 419,600 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 8,000 427,600 171.040 $ 256,560 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 5 $ 245,660 227.000 319.000 9,000 800,660 624.000 165,500 458.500 40,000 $1.299.160 $ 73.100 119.000 288,000 18.000 498.900 514,000 130.700 383.300 0 $ 881.400 Assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Property, plant, and equipsent 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 49.000 85.400 448.400 195.000 643.400 343.000 312.700 $ 253,000 57.000 80,400 390,400 113.000 503,400 288.000 90.000 378,000 $ 381.400 $1.299.160 Equipment that had cost $30.400 and on which there was accumulated depreciation of $10,300 was sold during Year 2 for $28,100, 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

1) Computation of Operating Activities for Year 2 using Indirect Method JOYNER COMPANY STATEMENT OF CASH FLOWS (USING INDIRECT METHOD PARTIAL) Particulars Amount Cash flow from operating activities Net Income Adjustments to reconcile net income to net cash provided by operating activities Adjustment for non cash effects $ 2,56,560 Depreciation Gain on sale of equipment $ $ 45,100 -8,000 Change in operating assets & liabilities Increase in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accrued liabilities Increase in accounts payable Increase in income taxes payable Net cash flow from operating activities $ -1,08,000 $ -31,000 $ 9,000 $ -8,000 $ 61,000 $ 5,000 $ 2,21,660 2) JOYNER COMPANY STATEMENT OF CASH FLOWS (USING INDIRECT METHOD) Particulars Amount Cash flow from operating activities Net Income Adjustments to reconcile net income to net cash provided by operating activities Adjustment for non cash effects $ 2,56,560 Depreciation Gain on sale of equipment $ $ 45,100 -8,000 Change in operating assets & liabilities Increase in accounts receivable Increase in inventories Decrease in prepaid expenses Decrease in accrued liabilities Increase in accounts payable Increase in income taxes payable Net cash flow from operating activities (a) $ -1,08,000 $ -31,000 $ 9,000 $ -8,000 $ 61,000 $ 5,000 $ 2,21,660 Cash Flow from Investing activities Equipment sold Equipment purchased $ 28,100 $ -1,40,400 Net cash flow from Investing activities (b) $-1,12,300 Cash Flow from Financing activities Cash dividends paid Common stock issued Bonds issued Loan to Hymans company Net cash flow from Financing activities (C) $ $ $ $ $ -33,800 55,000 82,000 -40,000 63,200 Net Change in cash c=a+b+c Beginning cash balance $ 1,72,560 $ 73,100 Closing cash balance $ 2,45,660 3) Free Cash Flow for Year 2: Free cash flow = =221660-140400-33800 47,460 $ * Kindly Comment down for any clarifications/ queries and please upvote.