Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $ 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 cost the company $6 were sold during the year for $16 and land that 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:

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Whole School Audit Development Planning For Primary And Special Schools

Authors: Brian Drakeford

1st Edition

1853465011, 978-1853465017

More Books

Students also viewed these Accounting questions

Question

Distinguish between hearing and listening.

Answered: 1 week ago

Question

Use your voice effectively.

Answered: 1 week ago