The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is as follows: 1
Question:
The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is as follows:
1 | Dec. 31, 20Y3 | Dec. 31, 20Y2 | |
2 | Assets | ||
3 | Cash | $155,000.00 | $150,000.00 |
4 | Accounts receivable (net) | 450,000.00 | 400,000.00 |
5 | Inventories | 770,000.00 | 750,000.00 |
6 | Investments | 0.00 | 100,000.00 |
7 | Land | 500,000.00 | 0.00 |
8 | Equipment | 1,400,000.00 | 1,200,000.00 |
9 | Accumulated depreciation-equipment | (600,000.00) | (500,000.00) |
10 | Total assets | $2,675,000.00 | $2,100,000.00 |
11 | Liabilities and Stockholders’ Equity | ||
12 | Accounts payable (merchandise creditors) | $340,000.00 | $300,000.00 |
13 | Accrued expenses payable (operating expenses) | 45,000.00 | 50,000.00 |
14 | Dividends payable | 30,000.00 | 25,000.00 |
15 | Common stock, $4 par | 700,000.00 | 600,000.00 |
16 | Paid-in capital: Excess of issue price over par—common stock | 200,000.00 | 175,000.00 |
17 | Retained earnings | 1,360,000.00 | 950,000.00 |
18 | Total liabilities and stockholders’ equity | $2,675,000.00 | $2,100,000.00 |
The income statement for the year ended December 31, 20Y3, is as follows:
1 | Sales | $3,000,000.00 | |
2 | Cost of goods sold | 1,400,000.00 | |
3 | Gross profit | $1,600,000.00 | |
4 | Operating expenses: | ||
5 | Depreciation expense | $100,000.00 | |
6 | Other operating expenses | 950,000.00 | |
7 | Total operating expenses | 1,050,000.00 | |
8 | Operating income | $550,000.00 | |
9 | Other income: | ||
10 | Gain on sale of investments | 75,000.00 | |
11 | Income before income tax | $625,000.00 | |
12 | Income tax expense | 125,000.00 | |
13 | Net income | $500,000.00 |
Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:
a. The investments were sold for $175,000 cash. | |
b. Equipment and land were acquired for cash. | |
c. There were no disposals of equipment during the year. | |
d. The common stock was issued for cash. | |
e. There was a $90,000 debit to Retained Earnings for cash dividends declared. |
Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter amounts that represent cash outflows as negative numbers using a minus sign.
Managerial Accounting
ISBN: 978-1337270595
14th edition
Authors: Carl S. Warren, James M. Reeve, Jonathan Duchac