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  3. joyner companys income statement for year 2 follows sales ...

Question: joyner companys income statement for year 2 follows sales ...

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Joyner Company’s income statement for Year 2 follows:

Sales $ 714,000
Cost of goods sold 358,000
Gross margin 356,000
Selling and administrative expenses 217,000
Net operating income 139,000
Nonoperating items:
Gain on sale of equipment 7,000
Income before taxes 146,000
Income taxes 58,400
Net income $ 87,600

Its balance sheet amounts at the end of Years 1 and 2 are as follows:

Year 2 Year 1
Assets
Cash and cash equivalents $ 47,400 $ 110,600
Accounts receivable 258,000 119,000
Inventory 320,000 270,000
Prepaid expenses 9,500 19,000
Total current assets 634,900 518,600
Property, plant, and equipment 628,000 507,000
Less accumulated depreciation 166,200 131,700
Net property, plant, and equipment 461,800 375,300
Loan to Hymans Company 44,000 0
Total assets $ 1,140,700 $ 893,900
Liabilities and Stockholders' Equity
Accounts payable $ 318,000 $ 267,000
Accrued liabilities 50,000 59,000
Income taxes payable 85,900 80,900
Total current liabilities 453,900 406,900
Bonds payable 202,000 108,000
Total liabilities 655,900 514,900
Common stock 337,000 286,000
Retained earnings 147,800 93,000
Total stockholders' equity 484,800 379,000
Total liabilities and stockholders' equity $ 1,140,700 $ 893,900

Equipment that had cost $31,700 and on which there was accumulated depreciation of $11,100 was sold during Year 2 for $27,600. 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.

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