In: Accounting
| Joyner Company’s income statement for Year 2 follows: | 
| Sales | $ | 705,000 | 
| Cost of goods sold | 80,000 | |
| Gross margin | 625,000 | |
| Selling and administrative expenses | 216,000 | |
| Net operating income | 409,000 | |
| Gain on sale of equipment | 9,000 | |
| Income before taxes | 418,000 | |
| Income taxes | 167,200 | |
| Net income | $ | 250,800 | 
| Its balance sheet amounts at the end of Years 1 and 2 are as follows: | 
| Year 2 | Year 1 | |||
| Assets | ||||
| Cash | $ | 192,900 | $ | 94,600 | 
| Accounts receivable | 262,000 | 110,000 | ||
| Inventory | 319,000 | 289,000 | ||
| Prepaid expenses | 8,500 | 17,000 | ||
| Total current assets | 782,400 | 510,600 | ||
| Property, plant, and equipment | 637,000 | 505,000 | ||
| Less accumulated depreciation | 165,900 | 131,700 | ||
| Net property, plant, and equipment | 471,100 | 373,300 | ||
| Loan to Hymans Company | 47,000 | 0 | ||
|   Total
assets | 
$ | 1,300,500 | $ | 883,900 | 
| Liabilities and Stockholders' Equity | ||||
| Accounts payable | $ | 318,000 | $ | 253,000 | 
| Accrued liabilities | 40,000 | 57,000 | ||
| Income taxes payable | 84,300 | 81,900 | ||
| Total current liabilities | 442,300 | 391,900 | ||
| Bonds payable | 202,000 | 119,000 | ||
| Total liabilities | 644,300 | 510,900 | ||
| Common stock | 338,000 | 274,000 | ||
| Retained earnings | 318,200 | 99,000 | ||
| Total stockholders' equity | 656,200 | 373,000 | ||
| Total liabilities and stockholders' equity | $ | 1,300,500 | $ | 883,900 | 
| 
 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.  | 
| Required: | |
| 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. (List any deduction in cash and cash outflows as negative amounts.)  | 
| 3. | 
 Compute the free cash flow for Year 2. (Negative amount should be indicated by a minus sign.)  | 
| 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 | ||