The following changes took place last year in Pavolik Company\'s balance sheet a

Question

The following changes took place last year in Pavolik Company's balance sheet accounts Liabilities and Stockholders' Equity Accounts Asset and Contra-Asset Accounts Cash Accounts receivable Inventory Prepaid expenses Long-term investments Property, plant, and equipment Accumulated depreciation $2l D Accounts payable $ 25 I Accrued liabilities $ 60 D Income taxes payable $20 I Bonds payable $ 22 D Common stock $410 I Retained earnings $ 85 I $65 I $ 25 D $30 I $212 I $100 D $85 I D Decrease; IIncrease Long-term investments that cost the company $22 were sold during the year for $48 and land that cost $47 was sold for $25. In addition, the company declared and paid $19 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 stoclk The company's income statement for the year follows Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Nonoperating items: $1,050 460 590 430 160 Loss on sale of land $ (22) 26 Gain on sale of investments Income before taxes Income taxes Net income 164 60 $ 104

Explanation / Answer

Explanation :

Increase in Property, Plant & Eqipment 410

Cost of Land sold 47

total Additons to PPE 457

Requirement 1 Pavolik Company Statement of Cash flows (partial) For Year Ended (Indirect Method) Cash flows from Operating activities: Net income        104 Adjustments to reconcile net income to
net cash from operating activities : Depreciation            85 Loss on Sale of Land            22 Gain on Sale of Investments           -26 Increase in Accounts Receivable           -25 Decrease in Inventory            60 Increase Prepaid Expenses           -20 Increase in Accounts Payable            65 Decrease in Accrued Liabilities           -25 Increase in Income tax payable            30        166 Net Cash Provided by operating activities        270 Requirement 2 Pavolik Company Statement of Cash flows Operating Activities: Net Cash Provided by operating activities        270 Investing activities: Proceeds from Sale of Long term Investments            48 Proceeds from sale of land            25 Additions to property, Plant & Equipment        -457 Net Cash used by Investing Activities       -384 Cash flow from Financing Activities Issuance of Bonds Payable          212 Issuance of Common Stock        -100 Payment of dividends           -19 Cash provided by Financing Activities           93 Net cash used during the year         -21 Cash at beginning year        130 Cash at end year        109

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