Balance sheet accounts for Joyner Company contained the following amounts at the end of Years 1and 2:
The company’s income statement for Year 2 follows:
Equipment that had cost $40,000 and on which there was accumulated depreciation of $30,000 was sold during Year 2 for $18,000. Cash dividends totaling $15,000 were declared and paid during Year 2.
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.