Exercise 14-4 Prepare a Statement of Cash Flows [LO14-1, LO14-2]

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

Asset and Contra-Asset Accounts				Liabilities and Stockholders' Equity Accounts
Cash	$	17	D	Accounts payable	$	53	I
Accounts receivable	$	21	I	Accrued liabilities	$	21	D
Inventory	$	52	D	Income taxes payable	$	26	I
Prepaid expenses	$	16	I	Bonds payable	$	180	I
Long-term investments	$	18	D	Common stock	$	84	D
Property, plant, and equipment	$	350	I	Retained earnings	$	73	I
Accumulated depreciation	$	73	I

D = Decrease; I = Increase.

Long-term investments that cost the company $18 were sold during the year for $40 and land that cost $39 was sold for $21. In addition, the company declared and paid $15 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					$	930
Cost of goods sold						404
Gross margin						526
Selling and administrative expenses						390
Net operating income						136
Nonoperating items:
Loss on sale of land	$	(18	)
Gain on sale of investments		22				4
Income before taxes						140
Income taxes						52
Net income					$	88

The companys beginning cash balance was $122 and its ending balance was $105.

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.

Complete this question by entering your answers in the tabs below. Required 1 Required 2 Use the indirect method to determine the net cash provided by operating activities for the year. (Adjustment an to be deducted should be indicated with a minus sign.) Pavolik Company Statement of Cash Flows (partial) Required 1 Required 2 Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amour Pavolik Company Statement of Cash Flows Operating activities: Investing activities: Financing activities: Beginning cash and cash equivalents Ending cash and cash equivalents