Joyner Companys income statement for Year 2 follows Sales 7

Joyner Company’s income statement for Year 2 follows: Sales $ 706,000 Cost of goods sold 331,000 Gross margin 375,000 Selling and administrative expenses 216,000 Net operating income 159,000 Gain on sale of equipment 6,000 Income before taxes 165,000 Income taxes 49,500 Net income $ 115,500 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash $ 42,500 $ 72,900 Accounts receivable 270,000 129,000 Inventory 319,000 282,000 Prepaid expenses 9,500 19,000 Total current assets 641,000 502,900 Property, plant, and equipment 624,000 510,000 Less accumulated depreciation 165,600 130,800 Net property, plant, and equipment 458,400 379,200 Loan to Hymans Company 47,000 0 Total assets $ 1,146,400 $ 882,100 Liabilities and Stockholders\' Equity Accounts payable $ 311,000 $ 262,000 Accrued liabilities 44,000 51,000 Income taxes payable 85,100 80,100 Total current liabilities 440,100 393,100 Bonds payable 198,000 112,000 Total liabilities 638,100 505,100 Common stock 333,000 283,000 Retained earnings 175,300 94,000 Total stockholders\' equity 508,300 377,000 Total liabilities and stockholders\' equity $ 1,146,400 $ 882,100 Equipment that had cost $30,600 and on which there was accumulated depreciation of $10,000 was sold during Year 2 for $26,600. 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 for operating activities for Year 2. (Negative amount should be indicated by a minus sign.)

Solution

Joyner Compnay Cash flow Statement for the period ending Dec 31.Year 2. Indirect Method Details Amt $ Cash Flow From Operating Activities Net Income              115,500 Add Depreciation                44,800 Less : Capital Gain                (6,000) Increased Accounts Receivable            (141,000) Increased Inventory              (37,000) Decreased Prepaid Expenses                   9,500 Increased Accounts Payable                49,000 Decreased Accrued Expenses                (7,000) Increased Income Tax Payable                   5,000 Total Cash Flow From Operating Activities                32,800 Accumulted depreciation Year 1              130,800 Accumulaued depreciation year 2              165,600 Differecne =                34,800 Add Accumulated depreciation written off on sold equipment                10,000 Depreciation expense for Year 2                44,800