Dec. 31, 20Y3 Dec. 31, 20Y2 Assets $ 155,000 $ 150,000 Cash ..... Accounts receivable (net) 450,000 400,000 750,000 Inventories 770,000 Investments 100,000 Land 500,000 Equipment..... Accumulated depreciation-equipment . Total assets.. 1,400,000 1,200,000 (600,000) (500,000) $2,675,000 $2,100,000 Liabilities and Stockholders' Equity $ 300,000 $ 340,000 Accounts payable .... Accrued expenses payable . Dividends payable..... Common stock, $4 par. 45,000 50,000 30,000 25,000 600,000 700,000 Paid-in capital: Excess of issue price over par-common stock.... Retained earnings...... Total liabilities and stockholders' equity... 200,000 175,000 1,360,000 950,000 $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 merchandise sold 1,400,000 Gross profit ...... $1,600,000 Operating expenses: $ 100,000 Depreciation expense Other operating expenses 950,000 Total operating expenses . 1,050,000 $ 550,000 Operating income.. Other income: Gain on sale of investments.. 75,000 $ 625,000 Income before income tax Income tax expense 125,000 $ 500,000 Net income

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

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

Please see  the attachment for details:

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.

Dec. 31, 20Y3
Dec. 31, 20Y2
Assets
$ 155,000
$ 150,000
Cash
.....
Accounts receivable (net)
450,000
400,000
750,000
Inventories
770,000
Investments
100,000
Land
500,000
Equipment.....
Accumulated depreciation-equipment .
Total assets..
1,400,000
1,200,000
(600,000)
(500,000)
$2,675,000
$2,100,000
Liabilities and Stockholders' Equity
$ 300,000
$ 340,000
Accounts payable ....
Accrued expenses payable .
Dividends payable.....
Common stock, $4 par.
45,000
50,000
30,000
25,000
600,000
700,000
Paid-in capital: Excess of issue price over par-common stock....
Retained earnings......
Total liabilities and stockholders' equity...
200,000
175,000
1,360,000
950,000
$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 merchandise sold
1,400,000
Gross profit ......
$1,600,000
Operating expenses:
$ 100,000
Depreciation expense
Other operating expenses
950,000
Total operating expenses .
1,050,000
$ 550,000
Operating income..
Other income:
Gain on sale of investments..
75,000
$ 625,000
Income before income tax
Income tax expense
125,000
$ 500,000
Net income
Transcribed Image Text:Dec. 31, 20Y3 Dec. 31, 20Y2 Assets $ 155,000 $ 150,000 Cash ..... Accounts receivable (net) 450,000 400,000 750,000 Inventories 770,000 Investments 100,000 Land 500,000 Equipment..... Accumulated depreciation-equipment . Total assets.. 1,400,000 1,200,000 (600,000) (500,000) $2,675,000 $2,100,000 Liabilities and Stockholders' Equity $ 300,000 $ 340,000 Accounts payable .... Accrued expenses payable . Dividends payable..... Common stock, $4 par. 45,000 50,000 30,000 25,000 600,000 700,000 Paid-in capital: Excess of issue price over par-common stock.... Retained earnings...... Total liabilities and stockholders' equity... 200,000 175,000 1,360,000 950,000 $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 merchandise sold 1,400,000 Gross profit ...... $1,600,000 Operating expenses: $ 100,000 Depreciation expense Other operating expenses 950,000 Total operating expenses . 1,050,000 $ 550,000 Operating income.. Other income: Gain on sale of investments.. 75,000 $ 625,000 Income before income tax Income tax expense 125,000 $ 500,000 Net income
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