Question
The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is as follows: 1 Dec. 31, 20Y3 Dec. 31, 20Y2 2 Assets
The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is as follows:
1
Dec. 31, 20Y3
Dec. 31, 20Y2
2
Assets
3
Cash
$155,000.00
$150,000.00
4
Accounts receivable (net)
450,000.00
400,000.00
5
Inventories
770,000.00
750,000.00
6
Investments
0.00
100,000.00
7
Land
500,000.00
0.00
8
Equipment
1,400,000.00
1,200,000.00
9
Accumulated depreciation-equipment
(600,000.00)
(500,000.00)
10
Total assets
$2,675,000.00
$2,100,000.00
11
Liabilities and Stockholders' Equity
12
Accounts payable (merchandise creditors)
$340,000.00
$300,000.00
13
Accrued expenses payable (operating expenses)
45,000.00
50,000.00
14
Dividends payable
30,000.00
25,000.00
15
Common stock, $4 par
700,000.00
600,000.00
16
Paid-in capital in excess of parcommon stock
200,000.00
175,000.00
17
Retained earnings
1,360,000.00
950,000.00
18
Total liabilities and stockholders' equity
$2,675,000.00
$2,100,000.00
The income statement for the year ended December 31, 20Y3, is as follows:
1
Sales
$3,000,000.00
2
Cost of goods sold
(1,400,000.00)
3
Gross profit
$1,600,000.00
4
Operating expenses:
5
Depreciation expense
$100,000.00
6
Other operating expenses
950,000.00
7
Total operating expenses
(1,050,000.00)
8
Operating income
$550,000.00
9
Other income:
10
Gain on sale of investments
75,000.00
11
Income before income tax
$625,000.00
12
Income tax expense
(125,000.00)
13
Net income
$500,000.00
Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:
a. The investments were sold for $175,000 cash.
b. Equipment and land were acquired for cash.
c. There were no disposals of equipment during the year.
d. The common stock was issued for cash.
e. There was a $90,000 debit to Retained Earnings for cash dividends declared.
Create a statement of cash flows, using the direct method of presentingcash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter amounts that represent cash outflows as negative numbers using a minus sign.
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Accounting Information For Business Decisions
Authors: Loren A Nikolai, Billie Cunningham, John D Bazley
3rd Edition
1111066884, 9781111066888
