Question

$ 62 I 24 D $29 I $ 204 I 96 D $ 82 I The following changes took place last year in Pavolik Company's balance sheet accounts: s 28D Accounts payable 24I Accrued liabilities 58 D Income taxes payable $ 19I Bonds payable 21D Common stock 395 I Retained earnings $ 82 I Cash accounts receivable Prepaid expenses Long-term investments Property, plant, and equipment Accunulated depreciation D-Decrease, 1 : Increase. Long-term investments that cost the company $21 were sold addition, the company declared and paid $18 in cash dividends during the year. Besides the sale of la land that cost $ 5 as sdfor Sin equipment took place during the year Pavolik did not retire any bonds during the 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 et operating income $1,820 446 574 420 154 ating itens Loss on sale of Land Galn on sale of investments s (21) 25 Incone before taxes incone taxes 158 58 K Prev 2 of Next 04

Answer 1

Solution 1:

Pavolik Company
Statement of Cash Flows (Partial)
For the year
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Income	$100.00
Adjustments to reconcile net income to net cash provided by operations:
Depreciation Expense	$82.00
Gain on sale of investment	-$25.00
Loss on sale of land	$21.00
Increase in accounts receivables	-$24.00
Decrease in inventory	$58.00
Increase in prepaid expenses	-$19.00
Increase in accounts payable	$62.00
Decrease in accrued liabilities	-$24.00
Increase in income tax payable	$29.00
Net Cash provided by operating activities		$260.00

Solution 2:

Pavolik Company
Statement of Cash Flows (Indirect method)
Particulars	Details	Amount
Cash Flow from Operating Activities:
Net Cash provided by operating activities		$260.00
Cash Flow from Investing Activities:
Proceed from sale of long term investment	$46.00
Proceed from sale of land	$24.00
Additions to property, plant and equipment ($395 + $45)	-$440.00
Net Cash used in Investing activities		-$370.00
Cash Flow from Financing Activities:
Issuance of bond payable	$204.00
Repurchase of common stock	-$96.00
Cash dividends	-$18.00
Net Cash Provided by financing activities		$90.00
Net Increase / (Decrease) in Cash		-$20.00
Beginning cash and cash equivalents		$128.00
Ending cash and cash equivalents		$108.00