Question

The comparative balance sheet of Navaria 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	$424,300.00	$404,860.00
13	Accrued expenses payable	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 outflows, decreases in cash and a net cash outflow for each section, if required.

cash flows—indirect method

Instructions

Labels and Amount Descriptions

Statement of Cash Flows

X

Instructions

The comparative balance sheet of Navaria 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	$424,300.00	$404,860.00
13	Accrued expenses payable	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 outflows, decreases in cash and a net cash outflow for each section, if required.

X

Labels and Amount Descriptions

Labels and Amount Descriptions
Cash used for dividends
Cash used for merchandise
Cash used for purchase of equipment
Cash used for purchase of land
Cash received from customers
Cash from sale of common stock
Cash from sale of investments
December 31, 20Y3
Decrease in accounts payable
Decrease in accounts receivable
Decrease in accrued expenses payable
Decrease in inventories
Decrease in cash
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 cash
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

Labels and Amount Descriptions
Cash used for dividends
Cash used for merchandise
Cash used for purchase of equipment
Cash used for purchase of land
Cash received from customers
Cash from sale of common stock
Cash from sale of investments
December 31, 20Y3
Decrease in accounts payable
Decrease in accounts receivable
Decrease in accrued expenses payable
Decrease in inventories
Decrease in cash
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 cash
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

X

Statement of Cash Flows

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 outflows, decreases in cash and a net cash outflow for each section, if required.

Navaria Inc.

Statement of Cash Flows

1	Cash flows from operating activities:
2
3	Adjustments to reconcile net income to net cash flow from operating activities:
4
5
6	Changes in current operating assets and liabilities:
7
8
9
10
11
12
13	Cash flows from (used for) investing activities:
14
15
16
17
18
19	Cash flows from (used for) financing activities:
20
21
22
23
24	Cash at the beginning of the year
25	Cash at the end of the year

Answer 1

Answer-

NAVARIA INC.
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER 20Y3
Particulars		Amount
		$
Cash flow from operating activities
Net Income		199210
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation		18570
Gain on sale of investments	($280680-$240290)	-40390
Change in operating assets & liabilities
Increase in accounts receivable		-20140
Increase in inventories		-24350
Decrease in accrued expenses payable		-11030
Increase in accounts payable		19440
Net cash flow from operating activities (a)		141310
Cash Flow from Investing activities
Cash used for purchase of equipment		-153770
Cash used for purchase of land		-328170
Cash from sale of investments		280680
Net cash flow (used for) Investing activities (b)		-201260
Cash Flow from Financing activities
Cash from sale of common stock		192200
Cash used for dividends	($96260+$19880-$23200)	-92940
Net cash flow Financing activities (c)		99260
Net Change in cash c=a+b+c		39310
Cash at the beginning of the year		586340
Cash at the end of the year		625650