Question

the comparative balance sheet of Navaria Inc. for December 31, 20Y3 and 20Y2, is shown as follows:

		Dec. 31, 20Y3	Dec. 31, 20Y2
	Assets
3	Cash	$625,820.00	$586,050.00
4	Accounts receivable (net)	227,530.00	209,880.00
5	Inventories	641,480.00	616,920.00
6	Investments	0.00	240,910.00
7	Land	327,510.00	0.00
8	Equipment	704,830.00	554,110.00
9	Accumulated depreciation-equipment	(165,750.00)	(148,570.00)
10	Total assets	$2,361,420.00	$2,059,300.00
	Liabilities and Stockholders’ Equity
12	Accounts payable	$424,970.00	$405,330.00
13	Accrued expenses payable	42,810.00	51,640.00
14	Dividends payable	23,200.00	19,840.00
15	Common stock, $4 par	158,000.00	98,000.00
16	Paid-in capital: Excess of issue price over par—common stock	417,900.00	280,700.00
17	Retained earnings	1,294,540.00	1,203,790.00
18	Total liabilities and stockholders’ equity	$2,361,420.00	$2,059,300.00

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

A.	The investments were sold for $280,020 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 $186,520 credit to Retained Earnings for net income.
F.	There was a $95,770 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 outflows, decreases in cash and a net cash outflow for each section, if required.

Answer 1

Cash flow indirect method
Cash flow from operating activities
Net income before taxes		186520
Adjustments to reconcile the net income
Depreciation expense	17180
Profit on sale of investment	-39110
Changes in current asset and liabilities
Increase in accounts receivable	-17650
Increase in Inventory	-24560
Increase in accounts payable	19640
Decrease in accrued expense payable	-8830
Increase in dividend payable	3360
		-49970
Cash flow from operating activities		136550
Cash flow from Investing activities
Land purchased	-327510
Equipment purchased	-150720
Investment sold	280020
Cash flow from Investing activities		-198210

	Cash flow from Financing activities
	Common stock	60000
	Additional paid in capital	137200
	Dividend paid	-95770
	Cash flow from Financing activities		101430
	Net Cash and cash equivalent		39770
Add	Beginning cash and cash equivalent		586050
	Ending cash and cash equivalent		625820