Exercise 15-4 (Algo) Prepare a Statement of Cash Flows [LO15-1, LO15-2] The following changes took place last year in Pavolik Company's balance sheet accounts: Asset and Contra-Asset Accounts Cash Accounts receivable Inventory Prepaid expenses Long-term investments Property, plant, and equipment Accumulated depreciation D Decrease; I = Increase. $30 D $ 34 I $78 D $ 29 I $ 31 D Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: Loss on sale of land. Gain on sale of investments Throme hefore tavoc $ 545 I $ 112 I Liabilities and Stockholders' Equity Accounts Accounts payable. Accrued liabilities Income taxes payable. Bonds payable Common stock Retained earnings $ (31) 35 Long-term investments that cost the company $31 were sold during the year for $66 and land that cost $65 was sold for $34. In addition, the company declared and paid $28 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 company's income statement for the year follows: $ 1,320 586 734 520 214 $92 I $ 34 D $ 39 I 4 218 $ 284 I $ 136 D 112 I $ Long-term investments that cost the company $31 were sold during the year for $66 and land that cost $65 was sold for $34. In addition, the company declared and paid $28 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 company's income statement for the year follows: Sales Cost of goods sold Gross margin Selling and administrative expenses. Net operating income Nonoperating items: Loss on sale of land Gain on sale of investments Income before taxes. Income taxes Net income $ (31) 35 $ 1,320 586 734 520 214 4 218 78 $ 140 The company's beginning cash balance was $148 and its ending balance was $118. 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. Required 1 Required 2 Use the indirect method to determine the net cash provided by operating activities for the year. (Adjustment amounts that a to be deducted should be indicated with a minus sign.) Pavolik Company Statement of Cash Flows (partial) Net income Adjustments to convert net income to a cash basis: Depreciation Increase in accounts receivable Decrease in inventory Increase in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable Decrease in accrued liabilities Gain on sale of long-term investments Loss on sale of land Net cash provided by operating activities $ >>>> $ 69 $ 140 190 330 Required 2 > Required 1 Required 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 Operating activities: Net cash provided by operating activities Investing activities: Proceeds from sale of long-term investments Proceeds from sale of land Additions to property, plant & equipment Net cash used in investing activities Financing activities: Issuance of bonds payable Purchase of common stock Cash dividends Net cash provided by financing activities Net decrease in cash Beginning cash and cash equivalents Ending cash and cash equivalents $ 70 36 (644) 300 x (144) (30) X $ S 380 (538) 126 (32) 152 x 120
