The following changes took place last year in Pavolik Company\'s balance sheet a

Question

The following changes took place last year in Pavolik Company's balance sheet accounts Liabilities and Stockholders' Equity Accounts Asset and Contra-Asset Accounts Cash Accounts receivable Inventory Prepaid expenses Long-term investments Property, plant, and equipment Accum 65 I $ 25 D $ 30 I $212 I $100 D $ 85 I $21 D Accounts payable I Accrued liabilities $60 D Income taxes payable 20I Bonds payable $ 22 D Common stock $410 I Retained earnings $ 85 I ulated depreciation D Decrease; I Increase Long-term investments that cost the company $22 were sold during the year for $48 and land that cost $47 was sold for $25. In addition, the company declared and paid $19 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 The company's income statement for the year follows Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: $1,050 460 590 430 160 ? (22) 26 Loss on sale of land Gain on sale of investments Income before taxes Income taxes Net income 164 60 104 The company's beginning cash balance was $130 and its ending balance was $109 Required

Explanation / Answer

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Pavolik Company Partial Statement of Cash Flows Cash flows from operating activities Net Income (loss) $ 104 Adjustments to reconcile net income to : Depreciation expenses $   85 Loss on sale of Land $   22 Gain on sale of investments $ (26) Increase in accounts receivable $ (25) Decrease in inventory $   60 Increase in prepaid expenses $ (20) Increase in accounts payable $   65 Decrease in accrued liabilities $ (25) Increase in income tax payable $   30 Net cash flow from operating activities $ 270

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