Exercise 12-4 Prepare a Statement of Cash Flows [LO12-1, LO12-2] Long-term inves

Question

Exercise 12-4 Prepare a Statement of Cash Flows [LO12-1, LO12-2]

  

  

      Long-term investments that had cost the company $29 were sold during the year for $62, and land that had cost $61 was sold for $32. In addition, the company declared and paid $26 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.

  

   

  

  

Using the indirect method, determine the net cash provided by / used in operating activities for the year. (List any deduction in cash and cash outflows as negative amounts.)

   

Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.)

   

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

Explanation / Answer

1) Pavolik Company

Statement of Cash Flows (Partial) (Amounts in $)

2)   Pavolik Company

Statement of Cash Flows (Amounts in $)

Net Income 132 Adjustments to reconcile net income to operating cash flows Add: Depreciation Expense (Increase in Accumulated Depreciation) 106 Add: Loss on Sale of Land 29 Less: Gain on sale of Investment (33) Less: Increase in Accounts Receivable (32) Add: Decrease in Inventory 74 Less: Increase in Prepaid Expenses (27) Add: Increase in Accounts Payable 86 Less: Decrease in Accrued Liabilities (32) Add: Increase in Income taxes payable 37 Total Adjustments 208 Net Cash provided by Operating Activities 340

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