The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is
ID: 2560890 • Letter: T
Question
The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is shown as follows:
1
Dec. 31, 20Y3
Dec. 31, 20Y2
2
Assets
3
Cash
$155,000.00
$150,000.00
4
Accounts receivable (net)
450,000.00
400,000.00
5
Inventories
770,000.00
750,000.00
6
Investments
0.00
100,000.00
7
Land
500,000.00
0.00
8
Equipment
1,400,000.00
1,200,000.00
9
Accumulated depreciation-equipment
(600,000.00)
(500,000.00)
10
Total assets
$2,675,000.00
$2,100,000.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$340,000.00
$300,000.00
13
Accrued expenses payable (operating expenses)
45,000.00
50,000.00
14
Dividends payable
30,000.00
25,000.00
15
Common stock, $4 par
700,000.00
600,000.00
16
Paid-in capital: Excess of issue price over par—common stock
200,000.00
175,000.00
17
Retained earnings
1,360,000.00
950,000.00
18
Total liabilities and stockholders’ equity
$2,675,000.00
$2,100,000.00
Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:
a. The investments were sold for $175,000 cash.
b. Equipment and land were acquired for cash.
c. There were no disposals of equipment during the year.
d. The common stock was issued for cash.
e. There was a $500,000 credit to Retained Earnings for net income.
f. There was a $90,000 debit to Retained Earnings for cash dividends declared.
Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Be sure to complete the heading of the statement. Enter amounts that represent cash outflows as negative numbers using a minus sign.
Explanation / Answer
Note: Please check the exact wording of the answer choices for text entries from the list provided as the same is not posted along with the question.
Workings:
LIVERS INC. Statement of Cash Flows For the Year Ended December 31,20Y3 Cash flows from operating activites Net Income 500000 Adjustments to reconcile net income to net cash provided by operations Depreciation expense (600000-500000) 100000 Gain on sale of investments (175000-100000) -75000 Increase in Accounts Receivable -50000 Increase in Inventory -20000 Increase in Accounts Payable 40000 Decrease in Accrued expenses payable -5000 -10000 Net cash provided by operating activites 490000 Cash flows from investing activities Purchase of land -500000 Purchase of equipment -200000 Sale proceeds from investments 175000 Net cash used by investing activities -525000 Cash flows from financing activites Issuance of common stock (700000-600000) + (200000-175000) 125000 Dividends paid -85000 Net cash provided by financing activities 40000 Net increase (decrease) in cash 5000 Cash balance at beginning of year 150000 Cash balance at end of year 155000