Question

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

	Dec. 31, 20Y3			Dec. 31, 20Y2
Assets
Cash	$ 249,700			$ 235,700
Accounts receivable (net)	91,600			84,040
Inventories	258,190			248,260
Investments	0			96,600
Land	132,340			0
Equipment	282,170			222,180
Accumulated depreciation-equipment	(67,100)			(59,900)
Total assets	$946,900			$826,880
Liabilities and Stockholders' Equity
Accounts payable	$ 171,050			$ 162,900
Accrued expenses payable	17,200			21,500
Dividends payable	9,300			7,400
Common stock, $1 par	50,500			38,860
Paid-in capital: Excess of issue price over par-common stock	192,300			112,460
Retained earnings	506,550			483,760
Total liabilities and stockholders’ equity	$946,900			$826,880

The income statement for the year ended December 31, 20Y3, is as follows:

Sales		$1,594,870
Cost of merchandise sold		980,850
Gross profit		$ 614,020
Operating expenses:
Depreciation expense	$ 7,200
Other operating expenses	519,930
Total operating expenses		527,130
Operating income		$ 86,890
Other income:
Gain on sale of investments		16,100
Income before income tax		$ 102,990
Income tax expense		41,200
Net income		$ 61,790

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

1. The investments were sold for $112,700 cash.
2. Equipment and land were acquired for cash.
3. There were no disposals of equipment during the year.
4. The common stock was issued for cash.
5. There was a $39,000 debit to Retained Earnings for cash dividends declared.

Required:

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Use the minus sign to indicate cash outflows, cash payments, decreases in cash, or any negative adjustments.

Navaria Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y3
Cash flows from operating activities:
	$
Net cash flow from operating activities		$
Cash flows from (used for) investing activities:
	$
Net cash flow used for investing activities
Cash flows from (used for) financing activities:
	$
Net cash flow from financing activities
		$
Cash at the beginning of the year
Cash at the end of the year		$

Answer 1

Cash Flow Statement (Direct Method)

	Cash flows from operating activities:
	Cash Inflows:
	From customers				$ 1,587,310.00
	Cash Outflows:
	To suppliers of goods				$    (982,630.00)
	For Other Expense				$    (524,230.00)
	For Income Tax				$      (41,200.00)
	Net cash flow from operating activities					$      39,250.00
	Cash flows from investing activities:
	Sale of Investment				$      112,700.00
	Purchase of land				$    (132,340.00)
	Purchase of Equipment				$      (59,990.00)
	Net cash flow from investing activities					$    (79,630.00)
	Cash flows from financing activities:
	Issue of Common Stock				$        91,480.00
	Dividend Paid				$      (37,100.00)
	Net cash flow from financing activities					$      54,380.00
	Net cash flow from all activities					$      14,000.00
Add:	Beginning Cash Balance					$    235,700.00
	Ending Cash Balance					$    249,700.00

Workings:

	Cash Receipts from Customers
	Net Sales				$ 1,594,870.00
Add:	Beginning A/R				$        84,040.00
Less:	Ending A/R				$        91,600.00
					$ 1,587,310.00

	Cash Payments to Suppliers
	Cost of Goods Sold				$      980,850.00
Add:	Ending Inventory				$      258,190.00
Less:	Beginning Inventory				$      248,260.00
Add:	Beginning A/P				$      162,900.00
Less:	Ending A/P				$      171,050.00
					$      982,630.00

	Other Expense
	Other Operating Expense			$ 519,930.00
Add:	Beginning Payable			$   21,500.00
Less:	Ending Payable			$   17,200.00
				$ 524,230.00

	Income Tax Payments
	Beginning Income Tax Payable
Less:	Ending Income Tax Payable
Add:	Income Tax Expense			$ 41,200.00
				$ 41,200.00

	Dividend Paid
	Opening balance of Dividend Payable			$   7,400.00
Add:	Dividend Expense			$ 39,000.00
Less:	Ending balance of Dividend Payable			$ (9,300.00)
		Dividend Paid		$ 37,100.00