The following changes took place last year in Pavolik Company\'s balance sheet a
ID: 2581913 • Letter: T
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 Accumulated depreciation $ 32 D Accounts payable $ 36 I Accrued liabilities $ 82 D Income taxes payable $ 31I Bonds payable $ 33 D Common stock $575 I Retained earnings $118 I $ 98 I $ 36 D $ 41 I $ 300 I $144 D $118 I D = Decrease: I = Increase Long-term investments that cost the company $33 were sold during the year for $70 and land that cost $69 was sold for $36. In addition, the company declared and paid $30 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: $1,380 614 766 540 226 Loss on sale of land $ (33) Gain on sale of investments Income before taxes Income taxes Net income 4 230 82 $ 148 The company's beginning cash balance was $152 and its ending balance was $120Explanation / Answer
Details
Net
Cash Flow from Operating Activities
Net Profit before tax
230
Add: Non Cash and Non Operating Expenses
Depreciation
118
Loss on sale of Land
33
Less: Non Cash and Non Operating Incomes
Gain on sale of Investments
(37)
Operating profit before Working Capital changes
344
Add: Increase in Current Liabilities And decrease in Current Assets
Decrease in Inventory
82
Increase In Accounts Payable
98
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Accounts Receivable
(36)
Decrease In Accrued Liabilities
(36)
Increase in Prepaid expenses
(31)
Operating profit before income tax
421
Less: Income Tax Paid
(41)
Cash Flow from Operating Activities (A)
380
Cash Flow from Investing Activities
Purchase of Property, Plant and equipment
(644)
Sale of Land
36
Sale of Long term Investment
70
Cash Used in Investing Activities (B)
(538)
Cash Flow from Financing Activities
Issue of Bonds
300
Buyback of Common Stock
(144)
Dividend Paid
(30)
Cash Flow from in Financing Activities ( C )
126
Decrease in Cash Flow (A+B+C)
(32)
Opening Cash
152
Closing Cash
120
Property, Plant and equipment A/c
Particulars
In $
Particulars
In $
By Bank
36
By P&L
33
To bank(bal.)
644
Increase in balance
575
Total
644
Total
644
Income Tax A/c
Particulars
In $
Particulars
In $
To bank(Bal.)
41
To Increase in balance
41
By P&L
82
Total
82
Total
82
Details
Net
Cash Flow from Operating Activities
Net Profit before tax
230
Add: Non Cash and Non Operating Expenses
Depreciation
118
Loss on sale of Land
33
Less: Non Cash and Non Operating Incomes
Gain on sale of Investments
(37)
Operating profit before Working Capital changes
344
Add: Increase in Current Liabilities And decrease in Current Assets
Decrease in Inventory
82
Increase In Accounts Payable
98
Less: Decrease in Current Liabilities And Increase in Current Assets
Increase in Accounts Receivable
(36)
Decrease In Accrued Liabilities
(36)
Increase in Prepaid expenses
(31)
Operating profit before income tax
421
Less: Income Tax Paid
(41)
Cash Flow from Operating Activities (A)
380
Cash Flow from Investing Activities
Purchase of Property, Plant and equipment
(644)
Sale of Land
36
Sale of Long term Investment
70
Cash Used in Investing Activities (B)
(538)
Cash Flow from Financing Activities
Issue of Bonds
300
Buyback of Common Stock
(144)
Dividend Paid
(30)
Cash Flow from in Financing Activities ( C )
126
Decrease in Cash Flow (A+B+C)
(32)
Opening Cash
152
Closing Cash
120
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