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Statement of Cash Flows—Indirect Method The comparative balance sheet of Livers Inc. for December 31, 20Y3...

Statement of Cash Flows—Indirect Method

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

Dec. 31, 20Y3 Dec. 31, 20Y2
Assets
Cash $301,740 $281,660
Accounts receivable (net) 109,310 101,160
Inventories 308,580 299,510
Investments 0 116,040
Land 158,270 0
Equipment 340,460 264,800
Accumulated depreciation—equipment (79,710) (71,410)
Total assets $1,138,650 $991,760
Liabilities and Stockholders' Equity
Accounts payable (merchandise creditors) $206,100 $195,380
Accrued expenses payable (operating expenses) 20,500 25,790
Dividends payable 11,390 8,930
Common stock, $10 par 61,490 48,600
Paid-in capital: Excess of issue price over par-common stock 231,150 134,880
Retained earnings 608,020 578,180
Total liabilities and stockholders’ equity $1,138,650 $991,760

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

  1. The investments were sold for $135,770 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 $76,450 credit to Retained Earnings for net income.
  6. There was a $46,610 debit to Retained Earnings for cash dividends declared.

Required:

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

Livers Inc.
Statement of Cash Flows
For the Year Ended December 31, 20Y3
Cash flows from operating activities:
$
Adjustments to reconcile net income to net cash flow from operating activities:
Changes in current operating assets and liabilities:
Net cash flow from operating activities $
Cash flows from investing activities:
$
Net cash flow used for investing activities
Cash flows from financing activities:
$
Net cash flow from financing activities
$
Cash at the beginning of the year
Cash at the end of the year $

Solutions

Expert Solution

Cash Flow Statement (indirect):
Amount $
Cash from Operating Activities:
Net Income 76450
Add:Depreciation 8300
Less:Income on Investment sale -19730 135770-116040
less: Inc. in AR -8150 109310-101160
less: Inc. in Inv. -9070 308580-299510
add: Inc. in AP 10720 206100-195380
less: Dec. in Acc Exp. -5290 20500-25790
add: Inc. in DP 2460 11390-8930
Cash Inflow of Operating Activities 55690
Cash from Investing Activities:
Add: Sale in Investment 135770
Less:Purch. Of equip -75660 340460-264800
Less:Purch. Of land -158270
Cash outflow of Investing Activities -98160
Cash from Financing Activities:
Add:issue of CS 12890
Add: Additional capital received 96270
Less:Dividend paid -46610
Cash inflow of Financing Activities 62550
Net Cash inflow of all activities 20080
Add: Opening Cash 281660
Closing Cash 301740

ekkarill92 answered 1 year ago
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