The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is
ID: 2440771 • Letter: T
Question
The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is shown as follows:
Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:
The investments were sold for $118,830 cash.
Equipment and land were acquired for cash.
There were no disposals of equipment during the year.
The common stock was issued for cash.
There was a $63,870 credit to Retained Earnings for net income.
There was a $40,800 debit to Retained Earnings for cash dividends declared.
Required:
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.
Dec. 31, 20Y3 Dec. 31, 20Y2 Assets Cash $262,580 $246,510 Accounts receivable (net) 95,120 88,540 Inventories 268,530 262,130 Investments 0 101,560 Land 137,730 0 Equipment 296,270 231,760 Accumulated depreciation—equipment (69,360) (62,500) Total assets $990,870 $868,000 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $179,350 $171,000 Accrued expenses payable (operating expenses) 17,840 22,570 Dividends payable 9,910 7,810 Common stock, $10 par 53,510 42,530 Paid-in capital: Excess of issue price over par-common stock 201,150 118,050 Retained earnings 529,110 506,040 Total liabilities and stockholders’ equity $990,870 $868,000Explanation / Answer
Cash flow from operating activities net income for the year 63,870 adjustments to reconcile net income to net cash flow from operating activities Depreciation expense 6860 Gain on sale of investments -17270 increase in accounts receivable -6580 increase in inventories -6400 increase in accounts payable 8350 Decrease in accrued expenses payable -4730 net cash flow from operating activities 44,100 Cash flow from investing activities cash from sale of investment 118,830 purchase of land -137,730 purchase of Equipment -64510 Net cash used by investing activities -83,410 Cash flow from financing activities cash from stock issue 94080 cash dividend -38700 net cash flow from financing activities 55,380 net increase in cash 16,070 cash at the beginning of the year 246,510 cash at year end 262,580