The following changes took place last year in Pavolik Company’s balance sheet accounts:

Asset and Contra-Asset Accounts Liabilities and Equity Accounts

Cash $ 11 D Accounts payable $ 35 I

Accounts receivable $ 15 I Accrued liabilities $ 15 D

Inventory $ 40 D Income taxes payable $ 20 I

Prepaid expenses $ 10 I Bonds payable $ 132 I

Long-term investments $ 12 D Common stock $ 60 D

Property, plant, and equipment $ 260 I Retained earnings $ 55 I

Accumulated depreciation $ 55 I D =

Decrease; I = Increase.

Long-term investments that had cost the company $12 were sold during the year for $28, and land that had cost $27 was sold for $15. In addition, the company declared and paid $9 in cash dividends during the year. Besides the sale of land, no other sales or retirements 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 $ 750 Cost of goods sold 320 Gross margin 430 Selling and administrative expenses 330 Net operating income 100 Nonoperating items: Loss on sale of land $ (12) Gain on sale of investment 16 4 Income before taxes 104 Income taxes 40 Net income $ 64.

The company’s beginning cash balance was $110 and its ending balance was $99.

Required: 

1. Using the indirect method, determine the net cash provided by / used in operating activities for the year. (List any deduction in cash and cash outflows as negative amounts.)

2. Prepare a statement of cash flows for the year. (List any deduction in cash and cash outflows as negative amounts.)

Answer rating: 100% (QA)

1 Net cash from operating activities shall be 2 Cash f... View the full answer