The following changes took place last year in Pavolik Companys balance sheet accounts Asset and Contra Asset Accounts Liabilities and Stockholders' Equity Accounts Cash $ 13 D Accounts payable $ 41 I Accounts receivable $ 17 I Accrued liabilities $ 17 D Inventory $ 44 D Income taxes payable $ 22 I Prepaid expenses $ 12 I Bonds payable $ 148 I Long term investments $ 14 D Common stock $ 68 D Property, plant, and equipment $ 290 I Retained earnings $ 61 I Accumulated depreciation $ 61 I D Decrease I Increase Long term investments that cost the company $14 were sold during the year for $32 and land that cost $31 was sold for $17 In addition, the company declared and paid $11 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 $ 810 Cost of goods sold 348 Gross margin 462 Selling and administrative expenses 350 Net operating income 112 Nonoperating items Loss on sale of land $ (14 ) Gain on sale of investments 18 4 Income before taxes 116 Income taxes 44 Net income $ 72 The companys beginning cash balance was $114 and its ending balance was $101 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 Pavolik Company Statement of Cash Flows (partial) Net income Adjustments to convert sales to a cash basis Depreciation Decrease in accounts receivable Decrease in inventory Decrease in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable Gain on sale of long term investments Loss on sale of land Net cash provided by operating activities Pavolik Company Statement of Cash Flows Operating activities Investing activities Financing activities Beginning cash and cash equivalents Ending cash and cash equivalents

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 13, 2024

The following changes took place last year in Pavolik Companys balance sheet accounts: Asset and Contra-Asset Accounts Liabilities and Stockholders' Equity Accounts Cash $ 13

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

Asset and Contra-Asset Accounts				Liabilities and Stockholders' Equity Accounts
Cash	$	13	D	Accounts payable	$	41	I
Accounts receivable	$	17	I	Accrued liabilities	$	17	D
Inventory	$	44	D	Income taxes payable	$	22	I
Prepaid expenses	$	12	I	Bonds payable	$	148	I
Long-term investments	$	14	D	Common stock	$	68	D
Property, plant, and equipment	$	290	I	Retained earnings	$	61	I
Accumulated depreciation	$	61	I

D = Decrease; I = Increase.

Long-term investments that cost the company $14 were sold during the year for $32 and land that cost $31 was sold for $17. In addition, the company declared and paid $11 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				$	810
Cost of goods sold					348
Gross margin					462
Selling and administrative expenses					350
Net operating income					112
Nonoperating items:
Loss on sale of land	$	(14	)
Gain on sale of investments		18			4
Income before taxes					116
Income taxes					44
Net income				$	72

The companys beginning cash balance was $114 and its ending balance was $101.

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.

image text in transcribed

Pavolik Company Statement of Cash Flows (partial) Net income Adjustments to convert sales to a cash basis Depreciation Decrease in accounts receivable Decrease in inventory Decrease in prepaid expenses Increase in accounts payable Decrease in accrued liabilities Increase in income taxes payable Gain on sale of long-term investments Loss on sale of land Net cash provided by operating activities Pavolik Company Statement of Cash Flows Operating activities Investing activities Financing activities Beginning cash and cash equivalents Ending cash and cash equivalents