Question

The following changes took place last year in Pavolik Company's balance sheet accounts: Asset and Contra-Asset Accounts Liabilities and Stockholders Equity Accounts Cash Accounts receivable Inventory Prepaid expenses Long-tere investments Property, plant, and equipment Accumulated depreciation 28 D Accounts payable s24I Accrued liabilities $58DIncome taxes payable s19I Bonds payable 21D Common stock 395 I Retained earnings 82 I s 62 1 24 D S 29 I s284 I $ 96 0 82 I D Decrease:I Increase Long-term investments that cost the company $21 were sold during the year for $46 and land that cost $45 was sold for $24. In addition, the company declared and paid $18 in cash dividends during the year. Besides the sale of land, no other sales or retiremert 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 nargin Selling and administrative expenses Net operating income Nonoperating itemst $1,020 446 574 420 154 Loss on sale of land Gain on sale of investments s (21) 254 < Prey 2of 2 Nexd ะเ re to search

Answer 1

1)

Pavolic Company	$
Operating activities:
Operating Profit	100.00
Adjustments to convert net income to cash basis:
Depreciation	82.00
Loss on sale of land	21.00
Gain on sale of investment	-25.00
Decrease in inventory	58.00
Increase in Trade receivable	-24.00
Increase in prepaid expense	-19.00
Increase in Trade payable	62.00
Decrease in accrued liabilities	-24.00
Increase in income tax payable	29.00
Net cash provided by operating activities	260.00

2)

Pavolic Company
Statement of Cash Flows - Indirect Method
	$	$
Operating activities:
Operating Profit	100.00
Adjustments to convert net income to cash basis:
Depreciation	82.00
Loss on sale of land	21.00
Gain on sale of investment	-25.00
Decrease in inventory	58.00
Increase in Trade receivable	-24.00
Increase in prepaid expense	-19.00
Increase in Trade payable	62.00
Decrease in accrued liabilities	-24.00
Increase in income tax payable	29.00
Net cash provided by operating activities	260.00
Investing activities:
Sales of Investment	46.00
Purchase of Property , plant & Equipment	-440.00
Sales of Land	24.00
Net cash used in investing activities	-370.00
Financing activities:
Issue of Bond Payable	204.00
Decrease in common stock	-96.00
Dividend paid	-18.00
Net cash provided in financing activities	90.00
Net Decrease in cash	-20.00
Beginning cash and cash equivalents	128.00
Ending cash and cash equivalents		108.00