Joyner Company’s income statement for Year 2 follows:Joyner Company’s income sta

Question

Joyner Company’s income statement for Year 2 follows:Joyner Company’s income statement for Year 2 follows:

     Equipment that had cost $30,400 and on which there was accumulated depreciation of $10,800 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.

Using the indirect method, compute the net cash for operating activities for Year 2. (Negative amount should be indicated by a minus sign.)

2. prepare a statement of cash flows for year 2

  Sales $ 703,000       Cost of goods sold 48,000       Gross margin 655,000       Selling and administrative expenses 218,000       Net operating income 437,000       Gain on sale of equipment 7,000       Income before taxes 444,000       Income taxes 177,600       Net income $ 266,400    

Explanation / Answer

1.Using the indirect method, compute the net cash for operating activities for Year 2. (Negative amount should be indicated by a minus sign.)

2. prepare a statement of cash flows for year 2

Cash flow from operating activities Net income 266400 Adjustment to reconcile net income Depreciation expenses 44900 Gain on sale of equipment (7000) Increase account receivable (148000) Increase inventory (48000) Decrease prepaid expenses 10500 Increase account payable 49000 Increase income tax payable 4000 decrease accured liabilities (15000) Net cash flow from operating activities 156800

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