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Statement of cash flows—indirect method The comparative balance sheet of Navaria Inc. for December 31, 20Y3 and 20Y2, is shown as follows: Dec 31, 20Y3 Dec. 31, 20Y2 Assets $ 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 $ 340,000 $ 300,000 Accrued expenses payable 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

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 16, Problem 16.1APR
Textbook Problem

Statement of cash flows—indirect method

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

  Dec 31, 20Y3 Dec. 31, 20Y2
Assets    
  $ 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 $ 340,000 $ 300,000
Accrued expenses payable 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 16 Solutions

Accounting
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