HELP PLEASE Long-term investments that had cost the company $6 were sold during
ID: 2418810 • Letter: H
Question
HELP PLEASE
Long-term investments that had cost the company $6 were sold during the year for $16 and land that had cost $15 was sold for $9. 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 following changes took place last year in Pavolik Company’s balance sheet accounts: 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.) Pavolik Company Statement of Cash Flows (partial) Net income 84 Adjustments to convert net income to a cash basis Depreciation 60 Increase in accounts receivable Decrease in inventory Increase in prepaid expenses Increase in accounts payable Decr Gain on sale of long-term investments Loss on sale of land Increase in income taxes payable ease in accrued liabilities 60 144 Net cash provided by operating activities
Explanation / Answer
Pavolik Company Cash Flow From Operating Activities Details Amt $ Net Income 84 Add : Depreciation 60 Total 144 Changes in Working Capital Increase in Accounts Receivable (110) Decrease in Inventory 70 Increase in Prepaid (9) Increase in Accounts Payable 35 Decrease in Accrued Liabilities (4) Increase in Income Tax payable 8 Net Change in WC (10) Less/add : Capital gain loss Loss on Sale of land 6 Gain in LT invetment sale (10) Total (4) Net Cash provided by opearting activities 130
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