Statement of cash flows —direct method applied to PR 13–1A The comparative balance sheet of Livers Inc. for December 31, 20Y3 and 20Y2 is 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 Liabilities and Stockholders' Equity $2,675,000 $2,100,000 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 The income statement for the year ended December 31, 20Y3, is as follows: Sales $ 3,000,000 Cost of goods sold 1,400,000 Gross profit $ 1,600,000 Operating expenses: Depreciation expense $ 100,000 Other operating expenses. 950,000 Total operating expenses 1,050,000 Operating income $550,000 Gain on sale of investments 75,000 Income before income tax $625,000 Income tax expense 125,00 Net income $ 500,000 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 $90,000 debit to Retained Earnings for cash dividends declared. Instructions Prepare a .statement of cash flows, using the direct method of presenting cash flows from operating activities.

BuyFind

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169
BuyFind

Corporate Financial Accounting

15th Edition
Carl Warren + 1 other
Publisher: Cengage Learning
ISBN: 9781337398169

Solutions

Chapter 13, Problem 13.5APR
Textbook Problem

Statement of cash flows —direct method applied to PR 13–1A

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

Liabilities and Stockholders' Equity

$2,675,000 $2,100,000
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

The income statement for the year ended December 31, 20Y3, is as follows:

Sales   $ 3,000,000
Cost of goods sold   1,400,000
Gross profit   $ 1,600,000
Operating expenses:    
Depreciation expense $ 100,000  
Other operating expenses. 950,000  
Total operating expenses   1,050,000
Operating income   $550,000
Gain on sale of investments   75,000
Income before income tax   $625,000
Income tax expense   125,00
Net income   $ 500,000

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 $90,000 debit to Retained Earnings for cash dividends declared.

Instructions

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

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Chapter 13 Solutions

Corporate Financial 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 - Free cash flow Dillin Inc. reported the following...Ch. 13 - Appendix 2 Cash received from customersdirect...Ch. 13 - Reporting changes in equipment on statement of...Ch. 13 - Cash flows from operating activitiesnet loss...Ch. 13 - Effect of transactions on cash flows Slate the...Ch. 13 - Classifying cash flows Identify the type of cash...Ch. 13 - Cash flows from operating activitiesindirect...Ch. 13 - Cash flows from operating activitiesindirect...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 - Free Cash Flow Analyze and compare Amazon.com,...Ch. 13 - Analyze and compare Apple, Coca-Cola, and Verizon...Ch. 13 - Analyze Aeropostale Aeropostale, Inc. (AROPQ) is a...Ch. 13 - Analyze and compare ATT and Facebook ATT Inc. (T)...Ch. 13 - Analyze Priceline The Priceline Group Inc. (PCLN)...Ch. 13 - Ethics in Action Head Donuts Inc. is a retailer of...Ch. 13 - Communication Tidewater Inc., a retailer, provided...Ch. 13 - Using the statement of cash flows You are...

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