Equipment that had cost $31,100 and on which there was accumulated depreciation
ID: 2523538 • Letter: E
Question
Equipment that had cost $31,100 and on which there was accumulated depreciation of $10,200 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:Explanation / Answer
Cash flow indirect method Cash flow from operating activities Net income 250800 Adjustments to reconcile the net income Gain on sale of equipment -9000 Depreciation expense 44400 Loss on sale of equipment Changes in current asset and liabilities decrease in prepaid expense 8500 Increase in accounts receivable -152000 Increase in Inventory -30000 Increase in accounts payable 65000 decrease in Acrued liabilities -17000 Increase in income tax payable 2400 -87700 Cash flow from operating activities 163100 Cash flow from Investing activities Loan to hymans company -47000 Equipment purchased -163100 Equipment sold 29900 Cash flow from Investing activities -180200 Cash flow from Financing activities Bonds payable 83000 Common stock 64000 Dividend paid -31600 Cash flow from Financing activities 115400 Net Cash and cash equivalent 98300 Add Beginning cash and cash equivalent 94600 Ending cash and cash equivalent 192900
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