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 expenses | 8,500 | 17,000 | |||
Total current assets | 660,600 | 498,800 | |||
Property, plant, and equipment | 631,000 | 501,000 | |||
Less accumulated depreciation | 165,700 | 131,500 | |||
Net property, plant, and equipment | 465,300 | 369,500 | |||
Loan to Hymans Company | 41,000 | 0 | |||
Total assets | $ | 1,166,900 | $ | 868,300 | |
Liabilities and Stockholders' Equity | |||||
Accounts payable | $ | 314,000 | $ | 254,000 | |
Accrued liabilities | 41,000 | 58,000 | |||
Income taxes payable | 85,500 | 81,300 | |||
Total current liabilities | 440,500 | 393,300 | |||
Bonds payable | 198,000 | 106,000 | |||
Total liabilities | 638,500 | 499,300 | |||
Common stock | 345,000 | 279,000 | |||
Retained earnings | 183,400 | 90,000 | |||
Total stockholders' equity | 528,400 | 369,000 | |||
Total liabilities and stockholders' equity | $ | 1,166,900 | $ | 868,300 | |
Equipment that had cost $31,000 and on which there was accumulated depreciation of $10,500 was sold during Year 2 for $27,500. 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.
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.)
|
Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)
Required 2
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Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.)
|
Answer-1)-
JOYNER COMPANY | ||
STATEMENT OF CASH FLOWS PARTIAL (USING INDIRECT METHOD) | ||
FOR THE YEAR ENDED | ||
Particulars | Amount | |
$ | ||
Cash flow from operating activities | ||
Net Income | 126700 | |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Adjustment for non cash effects | ||
Depreciation | 44700 | |
Gain on sale of equipment | -7000 | |
Change in operating assets & liabilities | ||
Increase in accounts receivable | -158000 | |
Increase in inventories | -48000 | |
Decrease in prepaid expenses | 8500 | |
Decrease in accrued liabilities | -17000 | |
Increase in accounts payable | 60000 | |
Increase in income taxes payable | 4200 | |
Net cash flow from operating activities | 14100 |
2)-
JOYNER COMPANY | ||
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD) | ||
FOR THE YEAR ENDED | ||
Particulars | Amount | |
$ | ||
Cash flow from operating activities | ||
Net Income | 126700 | |
Adjustments to reconcile net income to net cash provided by operating activities | ||
Adjustment for non cash effects | ||
Depreciation | 44700 | |
Gain on sale of equipment | -7000 | |
Change in operating assets & liabilities | ||
Increase in accounts receivable | -158000 | |
Increase in inventories | -48000 | |
Decrease in prepaid expenses | 8500 | |
Decrease in accrued liabilities | -17000 | |
Increase in accounts payable | 60000 | |
Increase in income taxes payable | 4200 | |
Net cash flow from operating activities (a) | 14100 | |
Cash Flow from Investing activities | ||
Equipment sold | 27500 | |
Equipment purchased | -161000 | |
Net cash Flow from Investing activities (b) | -133500 | |
Cash Flow from Financing activities | ||
Cash dividends paid | ($90000+$126700-$183400) | -33300 |
Common stock issued | 66000 | |
Bonds issued | 92000 | |
Loan to Hymans company | -41000 | |
Net cash Flow from Financing activities (c) | 83700 | |
Net Change in cash c=a+b+c | -35700 | |
Beginning cash balance | 89800 | |
Closing cash balance | 54100 |
3)- Free cash flow = Operating cash flow – Capital expenditures- Dividends paid
= $126700-$161000-$14100
= ($48400)
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...
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 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: 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...
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 $ 701,000 Cost of goods sold 322,000 Gross margin 379,000 Selling and administrative expenses 216,000 Net operating income 163,000 Nonoperating items: Gain on sale of equipment 10,000 Income before taxes 173,000 Income taxes 69,200 Net income $ 103,800 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents $ 35,000 $ 85,200 Accounts receivable 263,000 127,000 Inventory...
Joyner Company's income statement for Year 2 follows: $ 713,000 160,000 553,000 217,000 336,000 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 7,000 343,000 137,200 $ 205, 800 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 $ 152,000 260,000 320,000 10,000 742,000 634,000 165, 300 468, 700 45,000 $1,255,700...
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 $ 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 $ 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...
Joyner Company’s income statement for Year 2 follows: Sales $ 708,000 Cost of goods sold 399,000 Gross margin 309,000 Selling and administrative expenses 216,000 Net operating income 93,000 Nonoperating items: Gain on sale of equipment 8,000 Income before taxes 101,000 Income taxes 40,400 Net income $ 60,600 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents $ 14,900 $ 60,100 Accounts receivable 269,000 147,000 Inventory...