Question

Sole the follwing problem

Statement of cash flows—indirect method

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	$625,650.00	$586,340.00
4	Accounts receivable (net)	228,170.00	208,030.00
5	Inventories	641,480.00	617,130.00
6	Investments	0.00	240,290.00
7	Land	328,170.00	0.00
8	Equipment	706,070.00	552,300.00
9	Accumulated depreciation-equipment	(165,580.00)	(147,010.00)
10	Total assets	$2,363,960.00	$2,057,080.00
11	Liabilities and Stockholders’ Equity
12	Accounts payable (merchandise creditors)	$424,300.00	$404,860.00
13	Accrued expenses payable (operating expenses)	41,850.00	52,880.00
14	Dividends payable	23,200.00	19,880.00
15	Common stock, $4 par	153,000.00	99,000.00
16	Paid-in capital: Excess of issue price over par—common stock	418,000.00	279,800.00
17	Retained earnings	1,303,610.00	1,200,660.00
18	Total liabilities and stockholders’ equity	$2,363,960.00	$2,057,080.00

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

A.	The investments were sold for $280,680 cash.
B.	Equipment and land were acquired for cash.
C.	There were no disposals of equipment during the year.
D.	The common stock was issued for cash.
E.	There was a $199,210 credit to Retained Earnings for net income.
F.	There was a $96,260 debit to Retained Earnings for cash dividends declared.

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. Use the minus sign to indicate cash out flows, cash payments, decreases in cash, or any negative adjustments.

Labels and Amount Descriptions

Labels and Amount Descriptions
Cash paid for dividends
Cash paid for merchandise
Cash paid for purchase of equipment
Cash paid for purchase of land
Cash received from customers
Cash received from sale of common stock
Cash received from sale of investments
Change in cash
December 31, 20Y3
Decrease in accounts payable
Decrease in accounts receivable
Decrease in accrued expenses payable
Decrease in inventories
Depreciation
For the Year Ended December 31, 20Y3
Gain on sale of investments
Increase in accounts payable
Increase in accounts receivable
Increase in accrued expenses payable
Increase in inventories
Loss on sale of investments
Net cash flow from operating activities
Net cash flow used for operating activities
Net cash flow from investing activities
Net cash flow used for investing activities
Net cash flow from financing activities
Net cash flow used for financing activities
Net income
Net loss

Answer 1

		Statement of cashflows			$
	Cashflow from operating activities:
	Net income				199210
	Adjustments:
	Depreciation expense			(Note:1)	18570
	Gain on sale of investment			(Note:2)	-40390
	Increase in accounts receivable
	(228170-208030)				-20140
	Increase in inventory
	(641480-617130)				-24350
	Increase in accounts payable
	(424300-404860)				19440
	Decrease in accrued expenses
	(52880-41850)				-11030
	Cashflow from operating activities (A)				141310
	Cashflow from investing activities:
	Purchase of equipment		(706070-552300)		-153770
	Purchase of land				-328170
	Sale of investments				280680
	Cashflow from investing activities (B)				-201260
	Cashflow from financing activities:
	Issue of common stock		(Note:3)		192200
	Dividend paid		(Note:4)		-92940
	Cashflow from financing activities ©				99260
	Net increase in cash (A)+(B)+©				39310
	Add:Beginning balance of cash				586340
	Ending balance of cash				625650
	Note:1
	Dpreciation for the year=Accumulated depreciation at the end-Accumulated depreciation at the beginning=165580-147010=$ 18570
	Note:2
				$
	Sale value of investment			280680
	Less: Cost of investment
	(Refer investment account)			240290
	Gain on sale of investment			40390
	Note:3
	Cash received on issue of common stock=Change in commom stock+Change in paid in capital excess of issue price over par=(153000-99000)+(418000-279800)=$ 192200
	Note:4
	Dividend paid
	Analysis of dividend payable
					$
	Beginning balance				19880
	Add: Cash dividend declared				96260
					116140
	Less: Ending balance				23200
	Dividend paid				92940
	Note:5
	Increase in current assets result in cash outflow
	Decrease in current assets result in cash inflow
	Increase in current liabilities result in cash inflow
	Decrease in current liabilities result in cash outflow