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	$626,170.00	$585,760.00
4	Accounts receivable (net)	227,840.00	208,880.00
5	Inventories	641,390.00	616,790.00
6	Investments	0.00	240,820.00
7	Land	327,380.00	0.00
8	Equipment	704,290.00	554,020.00
9	Accumulated depreciation-equipment	(167,160.00)	(148,930.00)
10	Total assets	$2,359,910.00	$2,057,340.00
11	Liabilities and Stockholders’ Equity
12	Accounts payable (merchandise creditors)	$424,670.00	$404,080.00
13	Accrued expenses payable (operating expenses)	43,080.00	52,050.00
14	Dividends payable	24,920.00	19,300.00
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	1,299,740.00	1,201,910.00
18	Total liabilities and stockholders’ equity	$2,359,910.00	$2,057,340.00

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

1	Sales		$5,367,766.00
2	Cost of goods sold		3,306,180.00
3	Gross profit		$2,061,586.00
4	Operating expenses:
5	Depreciation expense	$18,230.00
6	Other operating expenses	1,755,888.00
7	Total operating expenses		1,774,118.00
8	Operating income		$287,468.00
9	Other income:
10	Gain on sale of investments		39,070.00
11	Income before income tax		$326,538.00
12	Income tax expense		133,028.00
13	Net income		$193,510.00

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

	a. The investments were sold for $279,890 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 $95,680 debit to Retained Earnings for cash dividends declared.

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.

Labels and Amount Descriptions
Cash paid for dividends
Cash paid for purchase of equipment
Cash paid for purchase of land
Cash paid for purchase of treasury stock
Cash payments for income taxes
Cash payments for merchandise
Cash payments for operating expenses
Cash received from customers
Cash received from sale of common stock
Cash received from sale of investments
Change in cash
December 31, 20Y3
Depreciation
For the Year Ended December 31, 20Y3
Gain on sale of investments
Issuance of common stock for acquisition of land
Issuance of common stock for purchase of equipment
Loss on sale of investments
Net cash flow from financing activities
Net cash flow from investing activities
Net cash flow from operating activities
Net cash flow used for financing activities
Net cash flow used for investing activities
Net cash flow used for operating activities

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

Answer 1

Answer-

LIVERS INC.
STATEMENT OF CASH FLOWS (USING DIRECT METHOD)
FOR THE YEAR ENDED 31 DECEMBER, 20Y3
Particulars		Amount
		$
Cash Flow from Operating activities
Cash received from customers	($5367766+$208880-$227840)	5348806
Cash paid for merchandise	($3306180+$641390-$616790+404080-$424670	-3310190
Cash paid for operating expenses	($1755888+$52050-$43080)	-1764858
Cash payments for income taxes		-133028
Net cash flow from operating activities (a)		140730
Cash Flow from Investing activities
Cash paid for purchase of equipment		-150270
Cash paid for purchase of land		-327380
Cash received from sale of investments		279890
Net cash Flow from Investing activities (b)		-197760
Cash Flow from Financing activities
Cash paid for dividends	($95680+$19300-$24920)	-90060
Cash received from sale of common stock		187500
Net cash Flow from Financing activities (c)		97440
Net Change in cash c=a+b+c		40410
Cash at the beginning of the year		585760
Cash at the end of the year		626170