The following changes took place last year in Pavolik Companys balance sheet accounts: Asset and Contra-Asset Accounts Liabilities and Equity Accounts Cash $ 68 I Accounts payable $ 23 I Accounts receivable $ 13 I Accrued liabilities $ 9 D Inventory $ 29 D Income taxes payable $ 11 I Prepaid expenses $ 6 I Bonds payable $ 19 I Long-term investments $ 29 D Common stock $ 41 D Property, plant, and equipment $ 149 I Retained earnings $ 79 I Accumulated depreciation $ 42 I D = Decrease; I = Increase Long-term investments that had cost the company $29 were sold during the year for $47, and land that had cost $30 was sold for $70. In addition, the company declared and paid $35 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 $ 605 Cost of goods sold 245 Gross margin 360 Selling and administrative expenses 275 Net operating income 85 Nonoperating items: Gain on sale of land $ 40 Gain on sale of investment 18 58 Income before taxes 143 Income taxes 29 Net income $ 114 Pavolik Company Direct Method of Determining the Net Cash flows from Operating activities Sales Adjustments to a cash Basis: 0 Cost of Goods Sold Adjustments to a cash basis: 0 Selling and Administrative expenses Adjustments to a cash basis: 0 Income Taxes Adjustments to a cash basis 0 0 The companys beginning cash balance was $102 and its ending balance was $170. 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.)

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

Asset and Contra-Asset Accounts				Liabilities and Equity Accounts
Cash	$	68	I	Accounts payable	$	23	I
Accounts receivable	$	13	I	Accrued liabilities	$	9	D
Inventory	$	29	D	Income taxes payable	$	11	I
Prepaid expenses	$	6	I	Bonds payable	$	19	I
Long-term investments	$	29	D	Common stock	$	41	D
Property, plant, and equipment	$	149	I	Retained earnings	$	79	I
Accumulated depreciation	$	42	I

D = Decrease; I = Increase

Long-term investments that had cost the company $29 were sold during the year for $47, and land that had cost $30 was sold for $70. In addition, the company declared and paid $35 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			$	605
Cost of goods sold				245
Gross margin				360
Selling and administrative expenses				275
Net operating income				85
Nonoperating items:
Gain on sale of land	$	40
Gain on sale of investment		18		58
Income before taxes				143
Income taxes				29
Net income			$	114

The companys beginning cash balance was $102 and its ending balance was $170.

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.)

	Pavolik Company
Direct Method of Determining the Net Cash flows from Operating activities
Sales
Adjustments to a cash Basis:
		0
Cost of Goods Sold
Adjustments to a cash basis:
		0
Selling and Administrative expenses
Adjustments to a cash basis:
		0
Income Taxes
Adjustments to a cash basis
		0
		0