Question

Just need help with cash flows from operating activities!

The comparative balance sheet of Livers Inc. or December 31, 20Y3 and 20Y2, s as follows: Dec. 31, 20Y3 Dec.31,20Y2 1 Assets 2 $155,000.00 $150,000.00 3 Cash Accounts receivable (net) 450,000.00 400,000.00 4 770,000.00 5 Inventories 750,000.00 0.00 100,000.00 6 Investments 0.00 7Land 500,000.00 8 Equipment 1,400,000.00 1,200,000.00 9 Accumulated depreciation-equipment (600,000.00) (500,000.00) $2,675,000.00 $2,100,000.00 10 Total assets Liabilities and Stockholders' Equity 11 $340,000.00 $300,000.00 12 Accounts payable (merchandise creditors) 50,000.00 13 Accrued expenses payable (operating expenses) 45,000.00 25,000.00 14 Dividends payable 30,000.00 15 Common stock,$4 par 700,000.00 600,000.00 16 Paid-in capital in excess of par-common stock 200,000.00 175,000.00 17 Retained earnings 1,360,000.00 950,000.00 $2,675,000.00 $2,100,000.00 18 Total liabilities and stockholders' equity

Answer 1

Solution

Livers Inc
Statement of Cash Flows
Cash flows from operating activities:
Cash received from customers	$ 2,950,000
Cash payments for merchandise	-$ 1,380,000
Cash paid for operating expenses	-$ 955,000
Cash payment for income tax expense	-$ 125,000
Net cash flow from operating activities		$ 490,000

Only cash flow from operating activities is provided as asked.

Cash received from customers
Sales revenue	$ 3,000,000
Less: Increase in accounts receivable	-$ 50,000
Cash received from customers	$ 2,950,000

.

Cash payments for merchandise
Cost of goods sold	$ 1,400,000
Add: Increase in Inventory	$ 20,000
Net purchases	$ 1,420,000
Less: Increase in Accounts payable	-$ 40,000
Cash payments for merchandise	$ 1,380,000

.

Cash payments for Operating expenses
Operating expenses excluding depreciation	$ 950,000
Add: Decrease in accrued expense	$ 5,000
Cash payments for Operating expenses	$ 955,000