Equipment that had cost $31,600 and on which there was accumulated depreciation

Question

     Equipment that had cost $31,600 and on which there was accumulated depreciation of $11,900 was sold during Year 2 for $25,700. 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:

Explanation / Answer

Ans 1

Ans 2

Ans 3

Ans 1 Net Income    1,25,300.00 Add Income Tax        53,700.00 less Gain on sale of equipment        -6,000.00 Add:Depreciation ( 166200-130200)+11900        47,900.00        95,600.00 Less Income Tax paid =53700+81400-87400      -47,700.00 Operating cash flow before WC changes    1,73,200.00 Adjustment For WC changes Add: Decrease in Prepaid Expense        10,000.00 Increase in accounts Payable        45,000.00 Less: Increase in accounts Receivable -1,47,000.00 Increase in Inventory      -46,000.00 Decrease in accrued Liability        -5,000.00 -1,43,000.00 Operating cash flow        30,200.00

Ans 2

Ans 2 Net Income    1,25,300.00 Add Income Tax        53,700.00 less Gain on sale of equipment        -6,000.00 Add:Depreciation ( 166200-130200)+11900        47,900.00        95,600.00 Less Income Tax paid =53700+81400-87400      -47,700.00 Operating cash flow before WC changes    1,73,200.00 Adjustment For WC changes Add: Decrease in Prepaid Expense        10,000.00 Increase in accounts Payable        45,000.00 Less: Increase in accounts Receivable -1,47,000.00 Increase in Inventory      -46,000.00 Decrease in accrued Liability        -5,000.00 -1,43,000.00 Operating cash flow        30,200.00 Sale of Equipment        25,700.00 Purchase of PPE -1,68,600.00 Loan given      -41,000.00 net Cash used in Investing activities -1,83,900.00 Issue of Common stock        59,000.00 Issue of Bonds Payable        85,000.00 Cash dividend Paid (Net Income-Increase in Reatained Earnings)      -31,200.00 Net Cash from Fin activities    1,12,800.00 Opening Cash        92,600.00 Increase(Decrease) in Cash and Cash Equivalents      -40,900.00 Closing Cash        49,000.00

Ans 3

Ans 3 Free Cash flow=Operating cashflow- Capital Expenditures Amount Operating Cash flow        30,200.00 Capital Expenditures -1,68,600.00 Free Cash flow -1,38,400.00

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.