Statement of cash flows—indirect method The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is shown as follows: Dec. 31, 20Y3 Dec. 31, 20Y2 Assets Cash $ 155,000 $ 150,000 Accounts receivable (net) 450,000 400,000 Inventories 770,000 750,000 Investments 0 100,000 Land 500,000 0 Equipment 1,400,000 1,200,000 Accumulated depreciation—equipment (600,000) (500,000) Total assets $2,675,000 $2,100,000 Liabilities and Stockholders’ Equity Accounts payable (merchandise creditors) $ 340,000 $ 300,000 Accrued expenses payable (operating expenses) 45,000 50,000 Dividends payable 30,000 25,000 Common stock. $4 par 700,000 600,000 Paid-in capital: Excess of issue price over par—common stock 200,000 175,000 Retained earnings 1,360,000 950,000 Total liabilities and stockholders’ equity $2,675,000 $2,100,000 Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows: A. The investments were sold for $175,000 cash. B. Equipment and land were acquired for cash. C. There were no disposals of equipment during the year. D. The common stock was issued for cash. E. There was a $500,000 credit to Retained Earnings for net income. F. There was a $90,000 debit to Retained Earnings for cash dividends declared. Instructions Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

Solutions

Chapter
Section
Chapter 13, Problem 13.1APR
Textbook Problem

Statement of cash flows—indirect method

The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2, is shown as follows:

Dec. 31, 20Y3 Dec. 31, 20Y2
Assets
Cash $ 155,000 $ 150,000
Accounts receivable (net) 450,000 400,000
Inventories 770,000 750,000
Investments 0 100,000
Land 500,000 0
Equipment 1,400,000 1,200,000
Accumulated depreciation—equipment (600,000) (500,000)
Total assets $2,675,000 $2,100,000
Liabilities and Stockholders’ Equity
Accounts payable (merchandise creditors) $ 340,000 $ 300,000
Accrued expenses payable (operating expenses) 45,000 50,000
Dividends payable 30,000 25,000
Common stock. $4 par 700,000 600,000
Paid-in capital: Excess of issue price over par—common stock 200,000 175,000
Retained earnings 1,360,000 950,000
Total liabilities and stockholders’ equity $2,675,000 $2,100,000

Additional data obtained from an examination of the accounts in the ledger for 20Y3 are as follows:

  1. A. The investments were sold for $175,000 cash.
  2. B. Equipment and land were acquired for cash.
  3. C. There were no disposals of equipment during the year.
  4. D. The common stock was issued for cash.
  5. E. There was a $500,000 credit to Retained Earnings for net income.
  6. F. There was a $90,000 debit to Retained Earnings for cash dividends declared.

Instructions

Prepare a statement of cash flows, using the indirect method of presenting cash flows from operating activities.

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Chapter 13 Solutions

Financial & Managerial Accounting
Ch. 13 - Classifying cash flows Identify whether each of...Ch. 13 - Adjustments to net incomeindirect method Ripley...Ch. 13 - Changes in current operating assets and...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Land transactions on the statement of cash flows...Ch. 13 - Common stock transactions on the statement of cash...Ch. 13 - Cash received from customersdirect method Sales...Ch. 13 - Cash payments for merchandisedirect method The...Ch. 13 - Cash flows from operating activitiesnet loss...Ch. 13 - Effect of transactions on cash flows State the...Ch. 13 - Classifying cash flows Identify the type of cash...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activities indirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Reporting land transactions on statement of cash...Ch. 13 - Determining cash payments to stockholders The...Ch. 13 - Reporting stockholders' equity items on statement...Ch. 13 - Reporting land acquisition for cash and mortgage...Ch. 13 - Reporting issuance and retirement of long-term...Ch. 13 - Determining net income from net cash flow from...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method List the...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Determining selected amounts for cash flows from...Ch. 13 - Cash flows from operating activities direct method...Ch. 13 - Cash flows from operating activitiesdirect method...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flowsdirect method The...Ch. 13 - Statement of cash flows direct method applied to...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows indirect method The...Ch. 13 - Statement of cash flowsindirect method The...Ch. 13 - Statement of cash flows direct method The...Ch. 13 - Statement of cash flowsdirect method applied to PR...Ch. 13 - Continuing Company AnalysisAmazon, Best Buy, and...Ch. 13 - RadioShack: Free cash flow RadioShack Corporation...Ch. 13 - ATT and Facebook: Free cash flow ATT Inc. is a...Ch. 13 - Priceline: Free cash flow Priceline Group, Inc. is...Ch. 13 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 13 - Communication Tidewater Inc., a retailer, provided...

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