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Statement of Cash Flows—Direct Method applied to PR 16-1A The comparative balance sheet of Navaria Inc....

  1. Statement of Cash Flows—Direct Method applied to PR 16-1A

    The comparative balance sheet of Navaria Inc. for December 31, 20Y3 and 20Y2, is as follows:

         Dec. 31, 20Y3      Dec. 31, 20Y2
    Assets
    Cash $ 212,960 $ 201,740
    Accounts receivable (net) 78,400 71,930
    Inventories 220,990 212,490
    Investments 0 82,680
    Land 113,270 0
    Equipment 241,500 190,160
    Accumulated depreciation-equipment (57,500) (51,300)
      Total assets $809,620 $707,700
    Liabilities and Stockholders' Equity
    Accounts payable $ 146,390 $ 139,420
    Accrued expenses payable 14,720 18,400
    Dividends payable 8,000 6,400
    Common stock, $1 par 43,200 33,260
    Paid-in capital: Excess of issue price over par-common stock 164,600 96,250
    Retained earnings 432,710 413,970
      Total liabilities and stockholders’ equity $809,620 $707,700

    The income statement for the year ended December 31, 20Y3, is as follows:

    Sales $1,332,800
    Cost of merchandise sold 819,670
    Gross profit $ 513,130
    Operating expenses:
    Depreciation expense $ 6,200
    Other operating expenses 434,490
       Total operating expenses 440,690
    Operating income $ 72,440
    Other income:
    Gain on sale of investments 13,800
    Income before income tax $ 86,240
    Income tax expense 34,500
    Net income $ 51,740

    Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:

    1. The investments were sold for $96,480 cash.
    2. Equipment and land were acquired for cash.
    3. There were no disposals of equipment during the year.
    4. The common stock was issued for cash.
    5. There was a $33,000 debit to Retained Earnings for cash dividends declared.

    Required:

    Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

    Navaria Inc.
    Statement of Cash Flows
    For the Year Ended December 31, 20Y3
    Cash flows from operating activities:
    $
    Net cash flow from operating activities $
    Cash flows from (used for) investing activities:
    $
    Net cash flow used for investing activities
    Cash flows from (used for) financing activities:
    $
    Net cash flow from financing activities
    $
    Cash at the beginning of the year
    Cash at the end of the year $

Solutions

Expert Solution

Navaria Inc.
Statement of Cash Flows- Direct Method
For the Year Ended December 31, 20Y3
Cash flows from operating activities:
Cash Received From Customers
(1332800+71930-78400)
$1,326,330.00
Cash Payments For Merchandise
((819670-212490+220990+139420-146390)
-$821,200.00
Cash Payments For Operating Expenses
(434490+18400-14720)
-$438,170.00
Cash Payments For Income Taxes -$34,500.00
Net Cash Flow From Operating Activities (A) $32,460.00
Cash Flows From Investing Activities:
Cash Received From Sale Of Investments $96,480.00
Cash Paid For Purchase Of Land -$113,270.00
Cash Paid For Purchase Of Equipment -$51,340.00
Net Cash Flow Used For Investing Activities (B) -$68,130.00
Cash Flows From Financing Activities:
Cash Received From Sale Of Common Stock (43200+164600-33260-96250) $78,290.00
Cash Paid For Dividends ((6400+33000-8000) -$31,400.00
Net Cash Flow From Financing Activities ( C) $46,890.00
Change In Cash (A+B+C) $11,220.00
Add: Cash At The Beginning Of The Year $201,740.00
Cash At The End Of The Year $212,960.00

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