Joyner Companys income statement for Year 2 follows Sales Co

Joyner Company\'s income statement for Year 2 follows: Sales Cost of goods sold $ 717,000 107,000 Gross margin Selling and administrative expenses 610,000 218,000 Net operating income Gain on sale of equipment 392,000 9,000 Income before taxes Income taxes 401,000 120,300 Net income $ 280,700 Its balance sheet amounts at the end of Years 1 and 2 are as follows:

Solution

JOYNER COMPANY Cash Flow Statement Cash flows from operating activities Net Income 280700 Adjustment to reconcile net income to: Depreciation expense 47500 $166,800-$130,700+$11,400 Gain on sale of equipment -9000 Increase in accounts receivable -130000 Increase in inventory -36000 Decrease in prepaid expense 9000 Increase in accounts payable 61000 Decrease in accrued liabilities -7000 Increase in Income tax payable 2500 -62000 Net cash provided by operating activities 218700 Cash flows from investing activities Sale of equipment 27600 Purchase of equipment -139000 $511,000-$30000-$620,000 Loan to Hymans Company -44000 Net cash used by investing activities -155400 Cash flows from financing activities Acquistion of bonds 75000 Issue of common stock 53000 Payment of dividends -33700 -$96,000-$280,700+$343000 Net cash used by financing activities 94300 Net increase in cash and cash equivalents 157600 Cash and cash equivalents at beginning of period 85400 Cash and cash equivalents at end of period 243000 2. Computation free Cash Flow =Net Cash Flow from operating Activities-Capital Expenditure- Dividend =218700-111400-33700=$73600