PA14. LO 16.6 Use the following excerpts from Victrolia Company's financial information to prepare a statement of cash flows (direct method) for the year 2018. 2018 Income Statement Balance Sheets Sales $455,000 Cost of Goods Sold (221,500) Operating Expenses, other than depreciation expense (58,600) Depreciation Expense (24,000) Gain on sale of plant assets 23,500 Net Income 174,400 Dec. 31, 2018 Cash $321,450 Accounts Receivable 39,750 Inventory Accounts Payable Accrued Liabilities 33,000 17,550 3,500 Cash Accounts Receivable Dec. 31, 2017 $133,500 36,500 Inventory Accounts Payable Accrued Liabilities Additional information: Plant assets were sold for $40,000; book value $16,500 Dividends of $25,000 were declared and paid Solution Victrolia Company Statement of Cash Flows (Direct Method) Year Ended December 31, 2018 Cash Flow from Operating Activities: Cash Collected from Customers Cash Payments: To suppliers of Inventory To vendors for Operating Expenses Net cash flows from operating activities Cash Flow from Investing Activities: Proceeds from Sale of Plant Assets Net Cash Flow from Investing Activities Cash Flow from Financing Activities: Dividends Paid Net Cash Flow from Financing Activities Total Cash Flow Increase/(Decrease) Cash Balance, December 31, 2017 Cash Balance, December 31, 2018 Calculations to convert to cash basis: Cash Collected from Customers Beginning balance, Accounts Receivable Accrual Basis Sales Potential Cash Collected Ending balance, Accounts Receivable Cash Collected from Customers this period 35,000 19,550 2,200 Cash Paid for Inventory Purchases: Part 1 Ending balance, Inventory Cost of Goods Sold Goods Available for Sale Beginning balance, Inventory Inventory Purchased this period Cash Paid for Inventory Purchases: Part 2 Beginning balance, Accounts Payable Inventory Purchased (from Part 1) Total Obligation to Pay Inventory Costs Ending balance, Accounts Payable Cash Paid for Inventory this period Cash Paid for Expense Related to a Current Liability Beginning balance, Accrued Liabilities Expense on Income Statement Total Obligation to Pay Expense Ending balance, Accrued Liabilities. Cash Paid for Other Expenses this period