1.Joyner Company
Statement of Cash flows
For Year 2
Particulars Amount ($) Calculation
Cash flows from operating activities:
Net income 56,000
Add: Depreciation expense 42,000 $132,000 - $120,000 + $30,000
Less: Gain on sale of equipment 8,000
Less: Increase in accounts receivable 80,000
Less: Increase in inventories 50,000
Add: Decrease in prepaid expense 7,000
Add: Increase in accounts payable 60,000
Less: Decrease in accrued liabilities 10,000
Add: Increase in income tax payable 3,000
Net cash provided by operating activities (A) 20,000
Cash flows from investing activities:
Cash paid for purchase of property, plant and equipment (150,000) $400,000 - $510,000 - $40,000
Add: Cash received from sale of equipment 18,000
Less: Loan given to Hymans Company 40,000
Net cash used by investing activities (B) (172,000)
Cash flows from financing activities:
Cash paid for dividends (15,000) $124,000 - $83,000 - $56,000
Add: Cash received from issuance of stock 30,000
Add: Cash received from issuance of bonds 120,000
Net cash provided by financing activities (C) 135,000
Net decrease in cash and cash equivalents (D = A + B + C) (17,000)
Add: Cash and cash equivalents at beginning of period 21,000
Cash and cash equivalents at end of period 4,000
2.Free cash flow = Net cash provided by operating activities - Capital expenditures - Dividends
Free cash flow = $20,000 - $150,000 - $15,000
Free cash flow = ($145,000)
What Is Cash Flow?
The term cash flow refers to the net amount of cash and cash equivalents being transferred in and out of a company. Cash received represents inflows, while money spent represents outflows.
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