The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is
ID: 2578603 • 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:
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.
Labes and Amount Descriptions:
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
Explanation / Answer
statement of cash flows (using the indirect method)
Cash flow from operating activities
Net income $500,000
Add: Depreciation $100000
less: Gain on sale of investment (175000 -100000) ($75000)
less: Increase in accounts receivable (50000)
less: Increase in inventories (20000)
Add: Increase in accounts payable 40000
less: Decrease in accrued expenses payable (5000)
Net cash flow from operating activities 490000
Cash flow from Investing activities
Cash received from sale of investments 175000
Cash paid for purchase of equipment (200000)
Cash paid for purchase of land (500000)
Net cash flow used for investing activities (525000)
Cash flow from financing activities
Cash paid for dividends (85000)
Cash received from sale of common stock[100000+25000] $125000
Net cash flow from financing activities 40000
increase in cash [ 490000 + (525000)+ 40000] $5000
Add: Cash at beginning (Dec. 31, 20Y2) $150,000
Cash at end (Dec. 31, 20Y3) $155,000
Note:- Dividend payable
To cash (B/F) 85000 By Balance b/d 25,000 To Balance c/d 30000 By Retained earning $90,000 115000 115000