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 $625,680.00 $586,230.00 4 Accounts receivable (net) 228,100.00 208,850.00 5 Inventories 640,910.00 617,650.00 6 Investments 0.00 240,620.00 7 Land 328,090.00 0.00 8 Equipment 704,540.00 553,320.00 9 Accumulated depreciation-equipment (166,310.00) (147,840.00) 10 Total assets $2,361,010.00 $2,058,830.00 11 Liabilities and Stockholders’ Equity 12 Accounts payable (merchandise creditors) $425,280.00 $404,550.00 13 Accrued expenses payable (operating expenses) 41,990.00 52,020.00 14 Dividends payable 24,190.00 20,170.00 15 Common stock, $4 par 142,000.00 106,000.00 16 Paid-in capital: Excess of issue price over par—common stock 416,700.00 279,900.00 17 Retained earnings 1,310,850.00 1,196,190.00 18 Total liabilities and stockholders’ equity $2,361,010.00 $2,058,830.00 Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows: A. The investments were sold for $279,190 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 $211,240 credit to Retained Earnings for net income. F. There was a $96,580 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. Labels and Amount Descriptions
Cash paid for dividends
Cash paid for merchandise
Cash paid for purchase of equipment
Cash paid for purchase of land
Cash received from customers
Cash received from sale of common stock
Cash received from sale of investments
Change in cash
December 31, 20Y3
Decrease in accounts payable
Decrease in accounts receivable
Decrease in accrued expenses payable
Decrease in inventories
Depreciation
For the Year Ended December 31, 20Y3
Gain on sale of investments
Increase in accounts payable
Increase in accounts receivable
Increase in accrued expenses payable
Increase in inventories
Loss on sale of investments
Net cash flow from operating activities
Net cash flow used for operating activities
Net cash flow from investing activities
Net cash flow used for investing activities
Net cash flow from financing activities
Net cash flow used for financing activities
Net income
Net loss

Answer 1

The cash flow statement is prepared as below:

Livers Inc.
Cash Flow Statement - Indirect Method
Cash Flow from Operating Activities
Net Income	211,240
Add Depreciation (166,310 - 147,840)	18,470
Increase in Accounts Payable (425,280 - 404,550)	20,730
Less Increase in Accounts Receivable (228,100 - 208,850)	-19,250
Increase in Inventories (640,910 - 617,650)	-23,260
Decrease in Accrued Expenses Payable (52,020 - 41,990)	-10,030
Gain on Sale of Investments (279,190 - 240,620)	-38,570
Net Cash Flow from Operating Activities (A)	159,330
Cash Flow from Investing Activities
Cash Received from Sale of Investments	279,190
Cash Paid for Purchase of Land	-328,090
Cash Paid for Purchase of Equipment (704,540 - 553,320)	-151,220
Net Cash Flow Used for Investing Activities (B)	-200,120
Cash Flow from Financing Activities
Cash Received from Sale of Common Stock (142,000 + 416,700 - 106,000 - 279,900)	172,800
Cash Paid for Dividends (20,170 + 96,580 - 24,190 )	-92,560
Net Cash Flow from Financing Activities (C)	80,240
Net Increase/Decrease in Cash or Change in Cash (A+B+C)	$39,450
Add Cash Balance, Dec. 31, 20Y2	$586,230
Cash Balance, Dec. 31, 20Y3 (As provided in the question)	$625,680