Exercise 13-4 Prepare a Statement of Cash Flows [LO13-1, LO13-2]

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

Asset and Contra-Asset Accounts				Liabilities and Stockholders' Equity Accounts
Cash and cash equivalents	$	16	D	Accounts payable	$	50	I
Accounts receivable	$	20	I	Accrued liabilities	$	20	D
Inventory	$	50	D	Income taxes payable	$	25	I
Prepaid expenses	$	15	I	Bonds payable	$	172	I
Long-term investments	$	17	D	Common stock	$	80	D
Property, plant, and equipment	$	335	I	Retained earnings	$	70	I
Accumulated depreciation	$	70	I

D = Decrease; I = Increase.

Long-term investments that cost the company $17 were sold during the year for $38 and land that cost $37 was sold for $20. In addition, the company declared and paid $14 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					$	900
Cost of goods sold						390
Gross margin						510
Selling and administrative expenses						380
Net operating income						130
Nonoperating items:
Loss on sale of land	$	(17	)
Gain on sale of investments		21				4
Income before taxes						134
Income taxes						50
Net income					$	84

The companys beginning cash balance was $120 and its ending balance was $104.

Required:

1. Use the indirect method to determine the net cash provided by operating activities for the year.

2. Prepare a statement of cash flows for the year.