Homework SourseEquipment that had cost 31500 and on which there was accumul
Equipment that had cost $31,500 and on which there was accumulated depreciation of $10,600 was sold during Year 2 for $29,900. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock.
Using the indirect method, compute the net cash for operating activities for Year 2. (Negative amount should be indicated by a minus sign.)
Prepare a statement of cash flows for Year 2. (List any deduction in cash and cash outflows as negative amounts.)
Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.)
| Joyner Company’s income statement for Year 2 follows: |
Solution
1. Cash flow from OPerating activities is $ 159,900
2.
Statement of cash flow:
Working:
| Joyner Company | ||||
| Cash flow Statement | ||||
| Cash flow from operating activities: | Amount ($) | |||
| Net Income | 243,000 | |||
| Adjustment: | ||||
| Depreciation | 45,300 | |||
| Gain on sale of Equipment | (9,000) | |||
| Increase in accounts Receivable | (135,000) | |||
| Increase in inventory | (40,000) | |||
| Decrease in prepaid expenses | 9,500 | |||
| Increase in accounts Payable | 60,000 | |||
| Decrease in accrued liabilities | (16,000) | |||
| Increase in incometax payable | 2,100 | |||
| Cash flow from Operating activities | 159,900 |
