Question

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 $ 181,920 $ 171,610 Accounts receivable (net) 66,700 61,190 Inventories 187,980 180,750 Investments 0 70,330 Land 96,350 0 Equipment 205,440 161,760 Accumulated depreciation-equipment (48,800) (43,600) Total assets $689,590 $602,040 Liabilities and Stockholders' Equity Accounts payable $ 124,530 $ 118,600 Accrued expenses payable 12,520 15,650 Dividends payable 6,800 5,400 Common stock, $1 par 36,800 28,300 Paid-in capital: Excess of issue price over par-common stock 140,000 81,880 Retained earnings 368,940 352,210 Total liabilities and stockholders’ equity $689,590 $602,040 The income statement for the year ended December 31, 20Y3, is as follows: Sales $1,153,410 Cost of merchandise sold 709,350 Gross profit $ 444,060 Operating expenses: Depreciation expense $ 5,200 Other operating expenses 376,010 Total operating expenses 381,210 Operating income $ 62,850 Other income: Gain on sale of investments 11,700 Income before income tax $ 74,550 Income tax expense 29,820 Net income $ 44,730 Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows: The investments were sold for $82,030 cash. Equipment and land were acquired for cash. There were no disposals of equipment during the year. The common stock was issued for cash. There was a $28,000 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 $ Feedback Consider what account(s) would have an impact on determining how much cash is received during the period. Which account(s) would have an impact on determining how much was paid out in cash during the period? Were there any purchases or sales of noncurrent assets during the year? Did the company engage in any activities that affected the equity or debt in their company?

Answer 1

STATEMENT OF CASH FLOWS
Cash flows from operating activities:
Cash received from customers (1153410+61190-66700)	1147900
Cash payments for merchandise (709350+118600-124530+187980-180750)	-710650
Cash payments for operating expenses (376010+15650-12520)	-379140
Cash payments for income taxes	-29820
Net cash flow from operating activities		28290
Cash flow from (used for) investing activities:
Cash from sale of investments (70330+11700)	82030
Cash used for purchase of land	-96350
Cash used for purchase of equipment (205440-161760)	-43680
Net cash flow used for investing activities		-58000
Cash flows from (used for) financing activities:
Cash from sale of common stock (36800+140000-28300-81880)	66620
Cash used for dividends (28000+5400-6800)	-26600
Net cash flow from financing activities		40020
Increase in cash		10310
Cash at the beginning of the year		171610
Cash at the end of the year		181920