Question
The following changes took place last year in Pavolik Company's balance sheet accounts: Asset and Contra-Asset AccountsLiabilities and Stockholders' Equity AccountsCash$30DAccounts payable$92IAccounts receivable$34IAccrued liabilities$34DInventory$78DIncome taxes
The following changes took place last year in Pavolik Company's balance sheet accounts:
Asset and Contra-Asset AccountsLiabilities and Stockholders' Equity AccountsCash$30DAccounts payable$92IAccounts receivable$34IAccrued liabilities$34DInventory$78DIncome taxes payable$39IPrepaid expenses$29IBonds payable$284ILong-term investments$31DCommon stock$136DProperty, plant, and equipment$545IRetained earnings$112IAccumulated depreciation$112I
D = Decrease; I = Increase.
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$1,320
Cost of goods sold586
Gross margin734
Selling and administrative expenses520
Net operating income214
Nonoperating items:Loss on sale of land$(31)
Gain on sale of investments354Income before taxes218Income taxes78Net income$140
The company's beginning cash balance was $148 and its ending balance was $118.
1. Use the indirect method to determine the net cash provided by operating activities for the year.
2. Prepare statement of cash flows for the year.
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