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

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 $ 226,460 $ 212,720
Accounts receivable (net) 82,680 75,850
Inventories 233,010 224,050
Investments 0 87,180
Land 119,440 0
Equipment 254,650 200,510
Accumulated depreciation-equipment (60,600) (54,100)
  Total assets $855,640 $746,210
Liabilities and Stockholders' Equity
Accounts payable $ 154,350 $ 147,000
Accrued expenses payable 15,520 19,400
Dividends payable 8,400 6,700
Common stock, $1 par 45,600 35,070
Paid-in capital: Excess of issue price over par-common stock 173,500 101,480
Retained earnings 458,270 436,560
  Total liabilities and stockholders’ equity $855,640 $746,210

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

Sales $1,464,620
Cost of merchandise sold 900,740
Gross profit $ 563,880
Operating expenses:
Depreciation expense $ 6,500
Other operating expenses 477,470
   Total operating expenses 483,970
Operating income $ 79,910
Other income:
Gain on sale of investments 14,600
Income before income tax $ 94,510
Income tax expense 37,800
Net income $ 56,710

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

  1. The investments were sold for $101,780 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 $35,000 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:
Cash received from customers $
Cash payments for merchandise
Cash payments for operating expenses
Cash payments for income taxes
Net cash flow from operating activities $
Cash flows from (used for) investing activities:
Cash from sale of investments $
Cash used for purchase of land
Cash used for purchase of equipment
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
Cash from sale of common stock $
Cash used for dividends
Net cash flow from financing activities
Increase in cash $
Cash at the beginning of the year
Cash at the end of the year $

Solutions

Expert Solution

Navaria Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y3
Cash flows from operating activities:
Cash received from customers $ 14,57,790.00
Cash payments for merchandise $ (9,02,350.00)
Cash payments for operating expenses $ (4,81,350.00)
Cash payments for income taxes $    (37,800.00)
Net cash flow from operating activities $    36,290.00
Cash flows from (used for) investing activities:
Cash from sale of investments $   1,01,780.00
Cash used for purchase of land $ (1,19,440.00)
Cash used for purchase of equipment $    (54,140.00)
Net cash flow used for investing activities $ (71,800.00)
Cash flows from (used for) financing activities:
Cash from sale of common stock $      82,550.00
Cash used for dividends $    (33,300.00)
Net cash flow from financing activities $    49,250.00
Increase in cash $    13,740.00
Cash at the beginning of the year $ 2,12,720.00
Cash at the end of the year $ 2,26,460.00
Cash received from customers
Sales $ 14,64,620.00
Less: Decrease in account sreceviables $          6,830.00
Cash received from customers $ 14,57,790.00
Cash payments for merchandise
Cost of goods sold $    9,00,740.00
Add: Increase in inventory $          8,960.00
Net purchases $    9,09,700.00
Less: Increase in accounts payables $          7,350.00
Cash payments for merchandise $    9,02,350.00
Cash payments for operating expenses
Other operating expenses $    4,77,470.00
Add: Decrease in accrued expenses   $          3,880.00
Cash payments for operating expenses $    4,81,350.00
Cash used for dividends
Dividends declared $        35,000.00
Less: Increase in dividends payable $          1,700.00
Cash used for dividends $        33,300.00

ekkarill92 answered 3 months ago
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