LIVERS INC. Statement of Cash Flows For the Year Ended December 31, 20Y3 Cash fl
ID: 2609843 • Letter: L
Question
LIVERS INC. Statement of Cash Flows For the Year Ended December 31, 20Y3 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 100,000 Loss on inventory write down and fixed assets Gain on sale of investments Changes in current operating assets and liabilities: Increase in accounts receivable (50,000) Increase in inventories (20,000) Increase in accounts payable 40,000 Decrease in accrued expenses payable (5,000) Net cash flow from operating activities Cash flows from investing activities: Cash received from sale of investments Cash paid for purchase of land (500,000) Cash paid for purchase of equipment (200,000) Net cash flow used for investing activities Cash flows from financing activities: Cash received from sale of common stock $125,000 Cash paid for dividends Net cash flow from financing activities Change in cash Cash at the beginning of the year 150,000 Cash at the end of the year $155,000 Optional: LIVERS INC. Spreadsheet (Work Sheet) for Statement of Cash Flows For the Year Ended December 31, 20Y3 Balance, Transactions Balance, Dec. 31, 20Y2 Debit Credit Dec. 31, 20Y3 Cash 150,000 155,000 Accounts receivable (net) 400,000 450,000 Inventories 750,000 770,000 Investments 100,000 - - Land - 500,000 Equipment 1,200,000 1,400,000 Accum. depr. - equipment (500,000) (600,000) Accounts payable (300,000) (340,000) Accrued expenses payable (50,000) (45,000) Dividends payable (25,000) (30,000) Common stock, $4 par (600,000) (700,000) Paid-in capital in excess of par (175,000) (200,000) Retained earnings (950,000) (1,360,000) Totals - - Operating activities: Net income Depreciation Gain on sale of investments Increase in accounts receivable Increase in inventories Increase in accounts payable Decrease in accrued expenses payable Investing activities: Purchase of equipment Purchase of land Sale of investments Financing activities: Declaration of cash dividends Sale of common stock Increase in dividends payable Net change in cash Totals LIVERS INC. Statement of Cash Flows For the Year Ended December 31, 20Y3 Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash flow from operating activities: Depreciation 100,000 Loss on inventory write down and fixed assets Gain on sale of investments Changes in current operating assets and liabilities: Increase in accounts receivable (50,000) Increase in inventories (20,000) Increase in accounts payable 40,000 Decrease in accrued expenses payable (5,000) Net cash flow from operating activities Cash flows from investing activities: Cash received from sale of investments Cash paid for purchase of land (500,000) Cash paid for purchase of equipment (200,000) Net cash flow used for investing activities Cash flows from financing activities: Cash received from sale of common stock $125,000 Cash paid for dividends Net cash flow from financing activities Change in cash Cash at the beginning of the year 150,000 Cash at the end of the year $155,000 Optional: LIVERS INC. Spreadsheet (Work Sheet) for Statement of Cash Flows For the Year Ended December 31, 20Y3 Balance, Transactions Balance, Dec. 31, 20Y2 Debit Credit Dec. 31, 20Y3 Cash 150,000 155,000 Accounts receivable (net) 400,000 450,000 Inventories 750,000 770,000 Investments 100,000 - - Land - 500,000 Equipment 1,200,000 1,400,000 Accum. depr. - equipment (500,000) (600,000) Accounts payable (300,000) (340,000) Accrued expenses payable (50,000) (45,000) Dividends payable (25,000) (30,000) Common stock, $4 par (600,000) (700,000) Paid-in capital in excess of par (175,000) (200,000) Retained earnings (950,000) (1,360,000) Totals - - Operating activities: Net income Depreciation Gain on sale of investments Increase in accounts receivable Increase in inventories Increase in accounts payable Decrease in accrued expenses payable Investing activities: Purchase of equipment Purchase of land Sale of investments Financing activities: Declaration of cash dividends Sale of common stock Increase in dividends payable Net change in cash TotalsExplanation / Answer
Solution :
The gain on sale of investment is not provided. Whatever is the amount of gain could be showin in the cash flow from operationg activites and the sale value inclusding gain would be reflected in the cash flow from investing activities.
It is given that the dividend provided for year 20Y2 is 25,000, so that must have been paid in 20Y3. So the dividend proposed for 20Y3 is 30,000 . Hence the balance of net income would be 1360,000 + 30,000 - 950,000 = 440,000.
Cash Flow Statement
Operating activities: Net income 440000 Depreciation 100000 Gain on sale of investments 0 -50000 Increase in inventories -20000 Increase in accounts payable 40000 Decrease in accrued expenses payable -5000 Total 505000 Investing activities: Purchase of equipment -500000 Purchase of land -200000 Sale of investments 100000 Total -600000 Financing activities: Declaration of cash dividends -25000 Sale of common stock 1250000 Total 100000 Net change in cash 5000 Cash at the beginning of the year 150000 Cash at the end of the year 155000 Equals net change 5000Related Questions
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