The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is
ID: 2600025 • Letter: T
Question
The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is as follows:
1
Dec. 31, 20Y3
Dec. 31, 20Y2
2
Assets
3
Cash
$625,820.00
$586,050.00
4
Accounts receivable (net)
227,530.00
209,880.00
5
Inventories
641,480.00
616,920.00
6
Investments
0.00
240,910.00
7
Land
327,510.00
0.00
8
Equipment
704,830.00
554,110.00
9
Accumulated depreciation-equipment
(165,750.00)
(148,570.00)
10
Total assets
$2,361,420.00
$2,059,300.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$424,970.00
$405,330.00
13
Accrued expenses payable (operating expenses)
42,810.00
51,640.00
14
Dividends payable
23,200.00
19,840.00
15
Common stock, $2 par
150,000.00
100,000.00
16
Paid-in capital: Excess of issue price over par—common stock
417,500.00
280,000.00
17
Retained earnings
1,302,940.00
1,202,490.00
18
Total liabilities and stockholders’ equity
$2,361,420.00
$2,059,300.00
The income statement for the year ended December 31, 20Y3, is as follows:
1
Sales
$5,368,400.00
2
Cost of goods sold
3,305,660.00
3
Gross profit
$2,062,740.00
4
Operating expenses:
5
Depreciation expense
$17,180.00
6
Other operating expenses
1,754,452.00
7
Total operating expenses
1,771,632.00
8
Operating income
$291,108.00
9
Other income:
10
Gain on sale of investments
39,110.00
11
Income before income tax
$330,218.00
12
Income tax expense
133,998.00
13
Net income
$196,220.00
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 direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter amounts that represent cash outflows as negative numbers using a minus sign.
Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter amounts that represent cash outflows as negative numbers using a minus sign.
Livers Inc.
Statement of Cash Flows
1
Cash flows from operating activities:
2
3
4
5
6
7
8
Cash flows from investing activities:
9
10
11
12
13
14
Cash flows from financing activities:
15
16
17
18
19
Cash at the beginning of the year
20
Cash at the end of the year
1
Dec. 31, 20Y3
Dec. 31, 20Y2
2
Assets
3
Cash
$625,820.00
$586,050.00
4
Accounts receivable (net)
227,530.00
209,880.00
5
Inventories
641,480.00
616,920.00
6
Investments
0.00
240,910.00
7
Land
327,510.00
0.00
8
Equipment
704,830.00
554,110.00
9
Accumulated depreciation-equipment
(165,750.00)
(148,570.00)
10
Total assets
$2,361,420.00
$2,059,300.00
11
Liabilities and Stockholders’ Equity
12
Accounts payable (merchandise creditors)
$424,970.00
$405,330.00
13
Accrued expenses payable (operating expenses)
42,810.00
51,640.00
14
Dividends payable
23,200.00
19,840.00
15
Common stock, $2 par
150,000.00
100,000.00
16
Paid-in capital: Excess of issue price over par—common stock
417,500.00
280,000.00
17
Retained earnings
1,302,940.00
1,202,490.00
18
Total liabilities and stockholders’ equity
$2,361,420.00
$2,059,300.00
Explanation / Answer
Livers Inc
Statement of Cash Flows
For the Years Ending December 31, 2013
2016
Cash Flows from Operating Activities
Net Income
$ 1,96,220
Less: Gain on sale of Investment
$ (39,110)
Add Expenses Not Requiring Cash:
Depreciation
$ 17,180
Other Adjustments:
Subtract increase in Accounts Receivable ($209,880-$227,530)
$ (17,650)
Add increase in Accounts Payable ($424, 970-$405,330)
$ 19,640
Subtract Increase in Inventory ($616,920-$641,480)
$ (24,560)
Subtract reduction in Accrued expense payable ($42,810-$51,640)
$ (8,830)
Net Cash from Operating Activities
$ 1,42,890
Cash Flows from Investing Activities
Sale of investments
$ 2,80,020
Purchase of New Equipment ($554,110-$704,830)
$ (1,50,720)
Purchase of Land
$ (3,27,510)
Net Cash Used for Investing Activities
$ (1,98,210)
Cash Flows from Financing Activities
Dividend paid
$ (92,410)
Borrowed Long Term Notes Payable
$ -
Issue of Common stock
$ 50,000
Paid in Capital in excess of par
$ 1,37,500
Net Cash from Financing Activities
$ 95,090
NET INCREASE/(DECREASE) IN CASH
$ 39,770
CASH, BEGINNING OF YEAR
$ 5,86,050
CASH, END OF YEAR
$ 6,25,820
Computation of Dividend paid
Particulars
Amount
Beginning Dividend Payable
$ 19,840
Add: Divined Declared
$ 95,770
Less: Ending Dividend Payable
$ (23,200)
Dividend Paid
$ 92,410
Livers Inc
Statement of Cash Flows
For the Years Ending December 31, 2013
2016
Cash Flows from Operating Activities
Net Income
$ 1,96,220
Less: Gain on sale of Investment
$ (39,110)
Add Expenses Not Requiring Cash:
Depreciation
$ 17,180
Other Adjustments:
Subtract increase in Accounts Receivable ($209,880-$227,530)
$ (17,650)
Add increase in Accounts Payable ($424, 970-$405,330)
$ 19,640
Subtract Increase in Inventory ($616,920-$641,480)
$ (24,560)
Subtract reduction in Accrued expense payable ($42,810-$51,640)
$ (8,830)
Net Cash from Operating Activities
$ 1,42,890
Cash Flows from Investing Activities
Sale of investments
$ 2,80,020
Purchase of New Equipment ($554,110-$704,830)
$ (1,50,720)
Purchase of Land
$ (3,27,510)
Net Cash Used for Investing Activities
$ (1,98,210)
Cash Flows from Financing Activities
Dividend paid
$ (92,410)
Borrowed Long Term Notes Payable
$ -
Issue of Common stock
$ 50,000
Paid in Capital in excess of par
$ 1,37,500
Net Cash from Financing Activities
$ 95,090
NET INCREASE/(DECREASE) IN CASH
$ 39,770
CASH, BEGINNING OF YEAR
$ 5,86,050
CASH, END OF YEAR
$ 6,25,820