Question

Instructions The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is shown as follows: Dec. 31, 20Y3 Dec. 31, 20Y2 Assets 3 Cash $626,640.00 $585,760.00 Accounts receivable (net) 226,900.00 208,390.00 Inventories 641,350.00 616,130.00 Investments 0.00 239,300.00 Land 328,730.00 0.00 Equipment 705,940.00 Accumulated depreciation-equipment (166,970.00) 553,530.00 (148,000.00) $2,055,110.00 Total assets $2,362,590.00 Liabilities and Stockholders' Equity

Answer 1

$198,010 Livers Inc. Statement of Cash Flows For the Year Ended December 31, 20Y3 Cash flows from operating activities Net Income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation Gain on sale of investments Changes in current operating assets and liabilities: | Increase in accounts receivable Increase in inventories Increase in accounts payable Decrease in accrued expenses payable Net cash flow from operating activities 18,970 -40,580 -18,510 -25,220 20,600 -10,730 $142,540

Cash flows from investing activities: Cash received from sale of investments Cash paid for purchase of land Cash paid for purchase of equipment Net cash flow used for investing activities 279,880 -328,730 -152,410 -201,260 191,200 -91,600 Cash flows from financing activities: | Cash received from sale of common stock Cash paid for dividends Net cash flow from financing activities Change in cash Cash at the beginning of the year Cash at the end of the year 99,600 40,880 585,760 $626,640

Explanation: Depreciation = ($166,970 – $148,000) = $18,970 Gain on sale of investments = ($279,880 – $239,300) = $40.580 Increase in accounts receivable = ($226,900 - $208,390) = $18,510 Increase in inventories = ($641,350 - $616,130) = $25,220 Increase in accounts payable = ($425,140 – $404,540) = $20,600 Decrease in accrued expenses payable = ($52,750 – $42,020) = $10,730 Cash paid for purchase of equipment = ($705,940 - $553,530) = $152,410 Cash received from sale of common stock = [($154,000 + $416,600) – ($100,000 + $ 279,400)] = $191,200 Cash dividends paid = Dividends payable at the beginning of the year Add: Dividends declared Less: Dividends payable at the end of the year Cash dividends paid $19,500 95,680 23,580 $91,600