Equipment that had cost $30,600 and on which there was accumulated depreciation
ID: 2491660 • Letter: E
Question
Equipment that had cost $30,600 and on which there was accumulated depreciation of $11,200 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.
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
1.Using the indirect method, the net cash for operating activities for Year 2 is $12,000 as shown in 2 below.
2. Statement of cash flows for Year 2 using Indirect method.
Joyner Company Statement of Cashflows Particulars $ $ Operating Activities Net Income 121,800 Adjustments to convert net income to cash basis: Depreciation 45,400 Increase in account receivable (156,000) Increase in inventrory (48,000) Decrease in prepaid expenses 8,000 Increase in accounts payable 51,000 Decrease in accrued Liabilities (8,000) Increase in Incometax payable 3,800 Gain on sale of equipment (6,000) (109,800) Net Cash provided by operating Activities 12,000 Investing Activities Addition to plant and equipment (135,600) Loan to Harker Company (43,000) Proceeds from Sale of Equipment 25,400 Net Cash used in Investing Activities (153,200) Financing Activities Issuance of bonds payable 90,000 Issuance of common stock 60,000 Cash dividend (30,300) Net Cash provided by financing Activities 119,700 Net decrease in cash (21,500) Cash balance beginning of the year 104,500 Cash balance ending of the year 83,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.