# Statement of Cash Flows; Free Cash Flow, business and finance homework help

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# Complete “Problem 14-10 Prepare a Statement of Cash Flows; Free Cash Flow” in chapter 14 of Managerial Accounting. Present your responses in an Excel spreadsheet.

 Complete “Problem 14-10 Prepare a Statement of Cash Flows; Free Cash Flow” in chapter 14 of Managerial Accounting. Present your responses in an Excel spreadsheet. Joyner Company’s income statement for Year 2 follows: Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$900,000 Cost of goods sold . . . . . . . . . . . . . . . . . 500,000 Gross margin . . . . . . . . . . . . . . . . . . . . . . 400,000 Selling and administrative expenses . . . . 328,000 Net operating income . . . . . . . . . . . . . . . 72,000 Gain on sale of equipment . . . . . . . . . . . 8,000 Income before taxes . . . . . . . . . . . . . . . . 80,000 Income taxes . . . . . . . . . . . . . . . . . . . . . . 24,000 Net income . . . . . . . . . . . . . . . . . . . . . . . \$ 56,000 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \$ 4,000 \$ 21,000 Accounts receivable . . . . . . . . . . . . . . . . . . 250,000 170,000 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 310,000 260,000 Prepaid expenses . . . . . . . . . . . . . . . . . . . . 7,000 14,000 Total current assets . . . . . . . . . . . . . . . . . . . 571,000 465,000 Property, plant, and equipment . . . . . . . . . . 510,000 400,000 Less accumulated depreciation . . . . . . . . 132,000 120,000 Net property, plant, and equipment . . . . . . . 378,000 280,000 Loan to Hymans Company . . . . . . . . . . . . . 40,000 0 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . \$989,000 \$745,000 Liabilities and Stockholders’ Equity Accounts payable . . . . . . . . . . . . . . . . . . . . \$310,000 \$250,000 Accrued liabilities . . . . . . . . . . . . . . . . . . . . . 20,000 30,000 Income taxes payable . . . . . . . . . . . . . . . . . 45,000 42,000 Total current liabilities . . . . . . . . . . . . . . . . . . 375,000 322,000 Bonds payable . . . . . . . . . . . . . . . . . . . . . . 190,000 70,000 Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . 565,000 392,000 Common stock . . . . . . . . . . . . . . . . . . . . . . 300,000 270,000 Retained earnings . . . . . . . . . . . . . . . . . . . . 124,000 83,000 Total stockholders’ equity . . . . . . . . . . . . . . 424,000 353,000 Total liabilities and stockholders’ equity . . . \$989,000 \$745,000 Equipment that had cost \$40,000 and on which there was accumulated depreciation of \$30,000 was sold during Year 2 for \$18,000. The company declared and paid a cash dividend during Year 2. It did not retire any bonds or repurchase any of its own stock. Required: 1. Using the indirect method, compute the net cash provided by operating activities for Year 2. 2. Prepare a statement of cash flows for Year 2. 3. Compute the free cash flow for Year 2. 4. Briefly explain why cash declined so sharply during the year.

HKPJ
School: UCLA

Attached.

Joyner Company’s
Assest
Sales
Cost of goods sold
Gross margin
Net operating income
Gain on sale of equipment
Income before taxes
Income taxes
Net income

Year 1

Year 2

\$900.000,00
\$500.000,00
\$400.000,00
\$328.000,00
\$72.000,00
\$8.000,00
\$80.000,00
\$24.000,00
\$56.000,00

Assets
Cash
Accounts receivable
Inventory
Prepaid expenses
Total current assets
Property/plant/equipment
Less accumulated depreciation
Net property/plant/equipment
Loan to Hymans company
Total assets

\$4.000,00
\$250.000,00
\$310.000,00
\$7.000,00
\$571.000,00
\$510.000,00
\$132.000,00
\$378.000,00
\$40.000,00
\$989.000,00

\$21.000,00
\$170.000,00
\$260.000,00
\$14.000,00
\$465.000,00
\$400.000,00
\$120.000,00
\$280.000,00
\$0,00
\$745.000,00

Liabilities and stockholders equity
Accounts Payable
Accured liabilities
Income tax payable
Total current liabilities
Bonds payable
Total liabilities
Common stock
Retained earnings
Total stockholders equity
Total liabilities and stockholders equity

\$310.000,00
\$20.000,00
\$45.000,00
\$375.000,00
\$190.000,00
\$565.000,00
\$300.000,00
\$124.000,00
\$424.000,00
\$989.000,00

\$250.000,00
\$30.000,00
\$42.000,00
\$322.000,00
\$70.000,00
\$392.000,00
\$270.000,00
\$83.000,00
\$353.000,00
\$745.000,00

Operating Expenses include depreciation expense of
depreciation expense

\$30.000
\$42.000

Joyner Company
Income Statement
For end of Year 2
Gain on sale of equipment

Assests
Cash
Accounts r...

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Anonymous
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