Requirement 1: Use the indirect method to determine the jet cash provided by ope

Question

Requirement 1:
Use the indirect method to determine the jet cash provided by operating activities for the year.

Requirement 2:
Prepare a statement of cash flows for the year

The following changes took place last year in Pavolik Company's balance sheet accounts $15 D Accounts Payable $141 Accrued Liabilities $30D Bonds Payable $61 Deferred Income Taxes $30D Common Stock $146 Retained Earnings $221 $9 D $16I $7 I $41 D $26I Cash Accounts Recelvable Prepaid Expenses Long-Term Investments Plant and Equipment $28 D D Decrease:1 Increase Long term investments that had cost the company $30 were sold during the year for $51, and land that had cost $28 was sold for $16. In addition, the year No sales or retirements of plant and equipment took place during the year declared and paid $35 in cash dividends during the Cost of goods sold Gross maign 357 Net operating Income Gain on sale of Invwestments $21 12 Lorss on sale of land Iincome before taxes Income ties Net incomse

Explanation / Answer

Pavolik Company Statement of Cash Flows (partial) Net income          61 Adjustments to convert net income to a cash basis: + Depreciation          42 - Increase in accounts receivable         (14) + Decrease in inventory          30 - Increase in prepaid expenses           (6) + Increase in accounts payable          22 - Decrease in accrued liabilities           (9) + Increase in income taxes payable            7 - Gain on sale of long-term investments         (21) + Loss on sale of land          12 Net cash provided by operating activities $    124 Pavolik Company Statement of Cash Flows Operating activities: Net cash provided by operating activities $      124 Investing activities: Proceeds from sale of long-term investments $      51 Proceeds from sale of land          16 Additions to property, plant & equipment       (146) Net cash used in investing activities          (79) Financing activities: Issuance of bonds payable          16 Purchase of common stock         (41) Cash dividends         (35) Net cash provided by financing activities          (60) Net decrease in cash          (15) Beginning cash and cash equivalents Figures not given Ending cash and cash equivalents Figures not given

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