The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is
ID: 2599562 • 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 $130,640 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 $68,890 credit to Retained Earnings for net income.
There was a $44,860 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 $288,050 $271,040 Accounts receivable (net) 104,350 97,350 Inventories 294,570 288,210 Investments 0 111,660 Land 151,090 0 Equipment 325,010 254,820 Accumulated depreciation—equipment (76,090) (68,710) Total assets $1,086,980 $954,370 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $196,740 $188,010 Accrued expenses payable (operating expenses) 19,570 24,810 Dividends payable 10,870 8,590 Common stock, $10 par 58,700 46,760 Paid-in capital: Excess of issue price over par-common stock 220,660 129,790 Retained earnings 580,440 556,410 Total liabilities and stockholders’ equity $1,086,980 $954,370Explanation / Answer
Cash flow from operating activities net income for the year 68,890 Adjustments to reconcile net income to net cash flow from operating activities depreciation expense 7,380 Gain on sale of investment -18,980 increase in accounts receivable -7000 increase in inventories -6360 increase in accounts payable 8730 decrease in accrued expenses payable -5240 Net cash flow from operating activities 47,420 Cash flows from investing activities Cash from sale of investment 130,640 purchase of land for cash -151,090 purchase of Equipment for cash -70190 Net cash flow from investing activities -90,640 Cash flow from financing activity Cash dividend -42,580 cash from stock issue 102810 Net cash flow from financing activity 60,230 Net increase in cash 17,010 Cash at the beginning of the year 271,040 Cash at year end 288,050