Assignment
Joyner Company's income statement for Year 2 follows:
|
Sales
|
715,000
|
|
Cost of goods sold
|
44,000
|
|
Gross margin
|
671,000
|
|
Selling and administrative expenses
|
218,000
|
|
Net operating income
|
453,000
|
|
Gain on sale of equipment
|
6,000
|
|
Income before taxes
|
459,000
|
|
Income taxes
|
137,700
|
|
Net income
|
321,300
|
| |
Year 2
|
Year 1
|
|
Assets
|
|
|
|
Cash
|
255,700
|
65,100
|
|
Accounts receivable
|
269,000
|
132,000
|
|
Inventory
|
319,000
|
276,000
|
|
Prepaid expenses
|
8,000
|
16,000
|
|
Total current assets
|
851,700
|
489,100
|
|
Property, plant, and equipment
|
636,000
|
513,000
|
|
Less accumulated depreciation
|
166,400
|
130,400
|
|
Net property, plant, and equipment
|
469,600
|
382,600
|
|
Loan to Hymans Company
|
46,000
|
0
|
|
Total assets
|
1,367,300
|
871,700
|
|
Liabilities and Stockholders' Equity
|
|
|
|
Accounts payable
|
318,000
|
258,000
|
|
Accrued liabilities
|
40,000
|
59,000
|
|
Income taxes payable
|
84,400
|
81,700
|
|
Total current liabilities
|
442,400
|
398,700
|
|
Bonds payable
|
201,000
|
111,000
|
|
Total liabilities
|
643,400
|
509,700
|
|
Common stock
|
345,000
|
270,000
|
|
Retained earnings
|
378,900
|
92,000
|
|
Total stockholders' equity
|
723,900
|
362,000
|
|
Total liabilities and stockholders' equity
|
1,367,300
|
871,700
|
Equipment that had cost $31,500 and on which there was accumulated depreciation of $11,200 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 for operating activities for Year 2. (Negative amount should be indicated by a minus sign.)
2. Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)
3. Compute the free cash flow for Year 2.