Equipment that had cost $30,700 and on which there was accumulated depreciation
ID: 2497312 • Letter: E
Question
Equipment that had cost $30,700 and on which there was accumulated depreciation of $10,000 was sold during Year 2 for $26,700. 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
Net income 2,73,000 Adjustment ADD Depreciation 45400 Less Gain on sale of Equipment -6000 39400 Increase in account receivable -132000 Decrease in Prepaid expense 10500 Increase in inventory -47000 Increase in account payable 55000 Decrease in Ac crude liability -7000 increase in tax payable 4600 -1,15,900 Cash flow from Operating Activity 1,96,500
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