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	$626,100.00	$585,190.00
4	Accounts receivable (net)	228,630.00	208,060.00
5	Inventories	641,030.00	617,620.00
6	Investments	0.00	239,830.00
7	Land	328,160.00	0.00
8	Equipment	705,110.00	553,850.00
9	Accumulated depreciation-equipment	(166,840.00)	(147,700.00)
10	Total assets	$2,362,190.00	$2,056,850.00
11	Liabilities and Stockholders’ Equity
12	Accounts payable (merchandise creditors)	$423,690.00	$404,660.00
13	Accrued expenses payable (operating expenses)	42,340.00	53,240.00
14	Dividends payable	23,050.00	18,680.00
15	Common stock, $4 par	156,000.00	93,000.00
16	Paid-in capital: Excess of issue price over par—common stock	417,000.00	279,200.00
17	Retained earnings	1,300,110.00	1,208,070.00
18	Total liabilities and stockholders’ equity	$2,362,190.00	$2,056,850.00

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

A.	The investments were sold for $279,300 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 $188,740 credit to Retained Earnings for net income.
F.	There was a $96,700 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.

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.

Score: 87/173

Livers 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 investing activities:
14
15
16
17
18
19	Cash flows from financing activities:
20		?
21
22
23
24	Cash at the beginning of the year		?
25	Cash at the end of the year		?

Answer 1

Solution

Livers Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y3
A. Cash Flows from Operating Activity
Net Income	$ 188,740
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation expense	$ 19,140
Gain on sale of Investment	-$ 39,470
Changes in current operating assets and liabilities:
Increase in Accounts Receivables	-$ 20,570
Increase in Inventory	-$ 23,410
Increase in Accounts Payable	$ 19,030
Decrease in Accrued expenses	-$ 10,900
Net cash flow from Operating activities		$ 132,560
B. Cash flows from Investing Activities
Cash received from Sale of Investment	$ 279,300
Cash paid for Purchase of Land	-$ 328,160
Cash paid for Purchase of Equipment	-$ 151,260
Net Cash flows from Investing activities		-$ 200,120
C. Cash Flows from Financing activities
Cash received from sale of Common stock	$ 200,800
Cash paid for dividends	-$ 92,330
Cash flows from Financing activities		$ 108,470
Net Increase (Decrease) in Cash [A+B+C]		$ 40,910
Cash at the beginning		$ 585,190
Cash at the end		$ 626,100

.

Calculation of Cash Dividend paid
Opening Balance of Dividends Payable	$ 18,680
Add: Dividends Declared during the year	$ 96,700
Total Dividend Liability	$ 115,380
Less: Closing Balance of Dividends	$ 23,050
Dividends Paid in cash During the year	$ 92,330