The following changes took place last year in Pavolik Company's balance sheet accounts: Asset and Contra-Asset Accounts Cash Accounts receivable Inventory $ 50 $110 I $ 700 Liabilities and stockholders' Equity Accounts Accounts payable $ 351 Accrued liabilities $ 40 Income taxes payable $ 81 Prepaid expenses $ 91 Bonds payable $150 I Long-term investments $ 60 Common stock $ 800 Property, plant, and equipment $1851 Retained earnings $ 541 $ 607 Accumulated depreciation D Decrease: 1-Increase. Long-term investments that cost the company $6 were sold during the year for $16 and land that cost $15 was sold for $9. In addition, the company declared and paid $30 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 $700 400 300 184 116 $ (6) 10 120 36 84 The company's beginning cash balance was $90 and its ending balance was $85 Required: Use the direct method to convert the company's income statement to a cash basis. (Adjustment amounts that are to be deducted should be Indicated with a minus sign.) Payolik Company Direct Method of Determining the Net Cash flows from Operating activities Sales Adjustments to a cash basis < Prev 2 of 2