ch 12 exercises #3

The following changes took place last year in Pavolik Companys balance sheet accounts:

Asset and Contra-Asset Accounts				Liabilities and Equity Accounts
Cash	$	5	D	Accounts payable	$	35	I
Accounts receivable	$	110	I	Accrued liabilities	$	4	D
Inventory	$	70	D	Income taxes payable	$	8	I
Prepaid expenses	$	9	I	Bonds payable	$	150	I
Long-term investments	$	6	D	Common stock	$	80	D
Property, plant, and equipment	$	185	I	Retained earnings	$	54	I
Accumulated depreciation	$	60	I

D = Decrease; I = Increase.

Long-term investments that had cost the company $6 were sold during the year for $16 and land that had cost $15 was sold for $9. In addition, the company declared and paid $30 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock.

The companys income statement for the year follows:

Sales			$	700
Cost of goods sold				400
Gross margin				300
Selling and administrative expenses				184
Net operating income				116
Nonoperating items:
Loss on sale of land	$	(6)
Gain on sale of investments		10		4
Income before taxes				120
Income taxes				36
Net income			$	84

The companys beginning cash balance was $90 and its ending balance was $85.

Required:

a.

Using the indirect method, determine the net cash provided by / used in operating activities for the year. (List any deduction in cash and cash outflows as negative amounts.)

Pavolik Company
Statement of Cash Flows - Indirect Method (Partial)
Adjustments to convert net income to a cash basis:

2.	Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.)

Pavolik Company
Statement of Cash Flows - Indirect Method
Operating activities:
Investing activities:
Financing Activities:
Beginning cash and cash equivalents
Ending cash and cash equivalents