Question

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	$155,000.00	$150,000.00
4	Accounts receivable (net)	450,000.00	400,000.00
5	Inventories	770,000.00	750,000.00
6	Investments	0.00	100,000.00
7	Land	500,000.00	0.00
8	Equipment	1,400,000.00	1,200,000.00
9	Accumulated depreciation-equipment	(600,000.00)	(500,000.00)
10	Total assets	$2,675,000.00	$2,100,000.00
11	Liabilities and Stockholders’ Equity
12	Accounts payable (merchandise creditors)	$340,000.00	$300,000.00
13	Accrued expenses payable (operating expenses)	45,000.00	50,000.00
14	Dividends payable	30,000.00	25,000.00
15	Common stock, $4 par	700,000.00	600,000.00
16	Paid-in capital in excess of par—common stock	200,000.00	175,000.00
17	Retained earnings	1,360,000.00	950,000.00
18	Total liabilities and stockholders’ equity	$2,675,000.00	$2,100,000.00

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

	a. The investments were sold for $175,000 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 $500,000 credit to Retained Earnings for net income.
	f. There was a $90,000 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. Enter amounts that represent cash outflows as negative numbers using a minus sign.

Answer 1

Thank you for your patience. Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Workings- Indirect Method	Amount $
Deprecation Expense
Accumulated deprecation- Closing Balance	600,000.00
Accumulated deprecation- opening Balance	500,000.00
Deprecation Expense	100,000.00
Gain on sale of investment
Book value of investment	100,000.00
Sale value of investment	175,000.00
Gain on sale of investment	75,000.00
Increase in Accounts Receivable
Closing Balance	450,000.00
Less: Opening Balance	400,000.00
Increase in Accounts Receivable	50,000.00
Increase in Inventory
Closing Balance	770,000.00
Less: Opening Balance	750,000.00
Increase in Inventory	20,000.00
Increase in Accounts Payable
Closing Balance	340,000.00
Less: Opening Balance	300,000.00
Increase in Accounts Payable	40,000.00
Decrease in Accrued expenses payable
Closing Balance	45,000.00
Less: Opening Balance	50,000.00
Decrease in Accrued expenses payable	(5,000.00)
Land purchased
Closing Balance	500,000.00
Less: Opening Balance	-
Land purchased	500,000.00
Equipment purchased
Closing Balance	1,400,000.00
Less: Opening Balance	1,200,000.00
Equipment purchased	200,000.00
Dividend paid
Opening Balance	25,000.00
Add: Dividend Declared	90,000.00
Less: Closing Balance	30,000.00
Dividend paid	85,000.00
Common Stock Issued
Closing Balance- Common Stock	700,000.00
Closing Balance- Paid-in capital in excess of par—common stock	200,000.00
Less: Opening Balance- Common Stock	600,000.00
Less: Opening Balance- Paid-in capital in excess of par—common stock	175,000.00
Common Stock Issued	125,000.00

Livers Inc.
Cashflow statement	Amount $	Amount $
Particulars
Net Income		500,000.00
Adjustment to reconcile Net Income to Net Cash
Add:
Deprecation Expense		100,000.00
Less:
Gain on sale of investment		75,000.00
Cash flow from Operations		525,000.00
Changes in Current Assets/Current Liabilities
Increase in Accounts Receivable	(50,000.00)
Increase in Inventory	(20,000.00)
Increase in Accounts Payable	40,000.00
Decrease in Accrued expenses payable	(5,000.00)	(35,000.00)
Net cash provided by operating activities		490,000.00
Cash flow from investing activities
Land purchased	(500,000.00)
Investment sold	175,000.00
Equipment purchased	(200,000.00)
Net cash used for investing activities		(525,000.00)
Cash flow from financing activities
Common Stock Issued	125,000.00
Dividends paid	(85,000.00)
Net cash provided by financing activities		40,000.00
Net Increase/(Decrease) in cash		5,000.00
Cash Balance, beginning		150,000.00
Cash Balance, ending		155,000.00