Long-term investments that had cost the company $17 were sold during the year fo

Question

  

  

      Long-term investments that had cost the company $17 were sold during the year for $38, and land that had cost $37 was sold for $20. In addition, the company declared and paid $14 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.

  

  

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.)

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

Explanation / Answer

Answer:

Pavolic Company Statement of cash flows- Indirect method(Partial)(In $) Income before taxes 134 Adjustment to convert net income on cash basis Loss on sale of land 17 Gain on sale of investment -21 Depreciation(Change in accumulated depreciation) 70 66 Working Capital adjustment: Increase in accounts receivable -20 Decrease in inventory 50 Increase in prepaid expenses -15 Increase in accounts payable 50 Decrease in accrued liabilities -20 45 Income tax paid -25 Cash flow/provided from operating activities 220

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