Joyner Company’s income statement for Year 2 follows: Sales$ 705,000Cost of goods sold92,000Gross margin613,000Selling and administrative expenses150,900Net operating income462,100Nonoperating items: Gain on sale of equipment6,000Income before taxes468,100Income taxes187,240Net income$ 280,860 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2Year 1Assets Cash$ 263,360$ 89,900Accounts receivable227,000113,000Inventory319,000288,000Prepaid expenses9,00018,000Total current assets818,360508,900Property, plant, and equipment634,000514,000Less accumulated depreciation166,100130,200Net property, plant, and equipment467,900383,800Loan to Hymans Company42,0000Total assets$ 1,328,260$ 892,700Liabilities and Stockholders' Equity Accounts payable$ 314,000$ 254,000Accrued liabilities42,00053,000Income taxes payable84,40081,700Total current liabilities440,400388,700Bonds payable207,000117,000Total liabilities647,400505,700Common stock335,000288,000Retained earnings345,86099,000Total stockholders' equity680,860387,000Total liabilities and stockholders' equity$ 1,328,260$ 892,700 Equipment that had cost $31,000 and on which there was accumulated depreciation of $11,600 was sold during Year 2 for $25,400. 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.

Statement of cash flows forms a part of financial statement of the entity and is prepared with a…

Answered: Joyner Company’s income statement for…

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter5: The Income Statement And The Statement Of Cash Flows

Section: Chapter Questions

Problem 1RE: Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of...

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Joyner Company’s income statement for Year 2 follows:

Sales	$ 705,000
Cost of goods sold	92,000
Gross margin	613,000
Selling and administrative expenses	150,900
Net operating income	462,100
Nonoperating items:
Gain on sale of equipment	6,000
Income before taxes	468,100
Income taxes	187,240
Net income	$ 280,860

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

	Year 2	Year 1
Assets
Cash	$ 263,360	$ 89,900
Accounts receivable	227,000	113,000
Inventory	319,000	288,000
Prepaid expenses	9,000	18,000
Total current assets	818,360	508,900
Property, plant, and equipment	634,000	514,000
Less accumulated depreciation	166,100	130,200
Net property, plant, and equipment	467,900	383,800
Loan to Hymans Company	42,000	0
Total assets	$ 1,328,260	$ 892,700
Liabilities and Stockholders' Equity
Accounts payable	$ 314,000	$ 254,000
Accrued liabilities	42,000	53,000
Income taxes payable	84,400	81,700
Total current liabilities	440,400	388,700
Bonds payable	207,000	117,000
Total liabilities	647,400	505,700
Common stock	335,000	288,000
Retained earnings	345,860	99,000
Total stockholders' equity	680,860	387,000
Total liabilities and stockholders' equity	$ 1,328,260	$ 892,700

Equipment that had cost $31,000 and on which there was accumulated depreciation of $11,600 was sold during Year 2 for $25,400. 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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Joyner Company’s income statement for Year 2 follows: Sales $ 705,000 Cost of goods sold 92,000 Gross margin 613,000 Selling and administrative expenses 150,900 Net operating income 462,100 Nonoperating items: Gain on sale of equipment 6,000