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In: Accounting

The following changes took place last year in Pavolik Company’s balance sheet accounts: Asset and Contra-Asset...

The following changes took place last year in Pavolik Company’s balance sheet accounts:

Asset and Contra-Asset Accounts Liabilities and Stockholders' Equity Accounts
Cash $ 14 D Accounts payable $ 44 I
Accounts receivable $ 18 I Accrued liabilities $ 18 D
Inventory $ 46 D Income taxes payable $ 23 I
Prepaid expenses $ 13 I Bonds payable $ 156 I
Long-term investments $ 15 D Common stock $ 72 D
Property, plant, and equipment $ 305 I Retained earnings $ 64 I
Accumulated depreciation $ 64 I

D = Decrease; I = Increase.

Long-term investments that cost the company $15 were sold during the year for $34 and land that cost $33 was sold for $18. In addition, the company declared and paid $12 in cash dividends during the year. Besides the sale of land, no other sales or retirements of plant and equipment took place during the year. Pavolik did not retire any bonds during the year or issue any new common stock.

The company’s income statement for the year follows:

Sales $ 840
Cost of goods sold 362
Gross margin 478
Selling and administrative expenses 360
Net operating income 118
Nonoperating items:
Loss on sale of land $ (15 )
Gain on sale of investments 19 4
Income before taxes 122
Income taxes 46
Net income $ 76

The company’s beginning cash balance was $116 and its ending balance was $102.

Required:

1. Use the indirect method to determine the net cash provided by operating activities for the year.

2. Prepare a statement of cash flows for the year.

Use the indirect method to determine the net cash provided by operating activities for the year. (Adjustment amounts that are to be deducted should be indicated with a minus sign.)
Pavolik Company
Statement of Cash Flows (partial)
0
$0

Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.)
Pavolik Company
Statement of Cash Flows
Operating activities:
Investing activities:
0
Financing activities:
0
0
Beginning cash and cash equivalents
Ending cash and cash equivalents $0

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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