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	$625,080.00	$586,430.00
4	Accounts receivable (net)	228,260.00	209,470.00
5	Inventories	641,070.00	616,400.00
6	Investments	0.00	240,170.00
7	Land	327,640.00	0.00
8	Equipment	705,000.00	552,830.00
9	Accumulated depreciation-equipment	(165,670.00)	(148,610.00)
10	Total assets	$2,361,380.00	$2,056,690.00
11	Liabilities and Stockholders’ Equity
12	Accounts payable (merchandise creditors)	$425,090.00	$405,900.00
13	Accrued expenses payable (operating expenses)	43,140.00	52,460.00
14	Dividends payable	23,780.00	19,970.00
15	Common stock, $4 par	147,000.00	96,000.00
16	Paid-in capital: Excess of issue price over par—common stock	417,200.00	279,600.00
17	Retained earnings	1,305,170.00	1,202,760.00
18	Total liabilities and stockholders’ equity	$2,361,380.00	$2,056,690.00

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

A.	The investments were sold for $280,150 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 $197,450 credit to Retained Earnings for net income.
F.	There was a $95,040 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.

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

1.

Livers Inc
Partial Statement of Cash Flows
Cash flows from operating activities
Net Income		$ 197,450
Adjustments to reconcile net income to :
Depreciation expenses	$   17,060		165670-148610
Gain on sale of investment	$ (39,980)		240170-280150
Increase in accounts receivable	$ (18,790)		209470-228260
Increase in inventory	$ (24,670)		616400-641070
Increase in accounts payable	$   19,190		425090-405900
Decrease in accrued expense payable	$   (9,320)		43140-52460
Net cash flow from operating activities		$ 140,940

2.

Livers Inc
Statement of Cash Flows
Net cash flow from operating activities		$   140,940
Cash flows from investing activities
Proceeds from Sale of investments	$   280,150
Cash paid for purchase of Equipment	$ (152,170)		552830-705000
Cash paid for purchase of Land	$ (327,640)
Net cash used by investing activities		$ (199,660)
Cash flows from financing activities
Proceeds from issuance of common stock	$   188,600		147000-96000+417200-279600
Cash paid for dividends	$   (91,230)		23780-19970-95040
Net cash provided by financing activities		$      97,370
Net Decrease in cash and cash equivalents		$      38,650
Cash and cash equivalents at beginning of period		$   586,430
Cash and cash equivalents at end of period		$   625,080