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	$	32	D	Accounts payable	$	98	I
Accounts receivable	$	36	I	Accrued liabilities	$	36	D
Inventory	$	82	D	Income taxes payable	$	41	I
Prepaid expenses	$	31	I	Bonds payable	$	300	I
Long-term investments	$	33	D	Common stock	$	144	D
Property, plant, and equipment	$	575	I	Retained earnings	$	118	I
Accumulated depreciation	$	118	I

D = Decrease; I = Increase.

Long-term investments that cost the company $33 were sold during the year for $70 and land that cost $69 was sold for $36. In addition, the company declared and paid $30 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					$	1,380
Cost of goods sold						614
Gross margin						766
Selling and administrative expenses						540
Net operating income						226
Nonoperating items:
Loss on sale of land	$	(33	)
Gain on sale of investments		37				4
Income before taxes						230
Income taxes						82
Net income					$	148

The company’s beginning cash balance was $152 and its ending balance was $120.

Required:

1. Use the indirect method to determine the net cash provided by operating activities for the year.

2. Prepare a statement of cash flows for the year.

 

Transcribed Image Text:

Required 1 Required 2 Use the indirect method to determine the net cash provided by operating activities for the year. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Pavolik Company Statement of Cash Flows (partial) Required 1 Required 2 > Required 1 Required 2 Use the indirect method to determine the net cash provided by operating activities for the year. (Adjustment amounts that are to be deducted should be indicated with a minus sign.) Pavolik Company Statement of Cash Flows (partial) Required 1 Required 2 >

Answer rating: 100% (QA)

1 Net cash provided by operating activities Net income 148 Adjustments to reconcile ne... View the full answer