Statement of Cash Flows—Indirect Method The comparative balance sheet of Livers

Question

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 $237,710 $219,850 Accounts receivable (net) 86,110 78,960 Inventories 243,090 233,800 Investments 0 90,570 Land 124,690 0 Equipment 268,210 206,690 Accumulated depreciation—equipment (62,790) (55,740) Total assets $897,020 $774,130 Liabilities and Stockholders' Equity Accounts payable (merchandise creditors) $162,360 $152,500 Accrued expenses payable (operating expenses) 16,150 20,130 Dividends payable 8,970 6,970 Common stock, $10 par 48,440 37,930 Paid-in capital: Excess of issue price over par-common stock 182,100 105,280 Retained earnings 479,000 451,320 Total liabilities and stockholders’ equity $897,020 $774,130 Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows: The investments were sold for $105,970 cash. Equipment and land were acquired for cash. There were no disposals of equipment during the year. The common stock was issued for cash. There was a $64,060 credit to Retained Earnings for net income. There was a $36,380 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 $ Previous

Explanation / Answer

Prepare a statement of cash flows, using the indirect method

Cash flow from operating activities Net income 64060 Adjustment to reconcile net income Depreciation exp 7050 Gain on sale of investment (15400) Increase account receivable (7150) Increase inventory (9290) Increase account payable 9860 Decrease accurred expenses (3980) Increase dividend payable 2000 Net cash flow from operating activities 47150 Cash flow from investing activities Sale of investment 105970 Purchase of land (124690) Purchase of equipment (61520) Net cash flow from investing activities (80240) Cash flow from financing activities Dividend paid (36380) Issue common stock 87330 Net cash flow from financing activities 50950 Net cash flow 17860 Beginning cash 219850 Ending cash 237710

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