1. Business
  2. Accounting
  3. direct method the comparative balance sheet of livers inc for...

Question: direct method the comparative balance sheet of livers inc for...

Question details

DIRECT METHOD

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

1

Dec. 31, 20Y3

Dec. 31, 20Y2

2

Assets

3

Cash

$625,820.00

$586,050.00

4

Accounts receivable (net)

227,530.00

209,880.00

5

Inventories

641,480.00

616,920.00

6

Investments

0.00

240,910.00

7

Land

327,510.00

0.00

8

Equipment

704,830.00

554,110.00

9

Accumulated depreciation-equipment

(165,750.00)

(148,570.00)

10

Total assets

$2,361,420.00

$2,059,300.00

11

Liabilities and Stockholders’ Equity

12

Accounts payable (merchandise creditors)

$424,970.00

$405,330.00

13

Accrued expenses payable (operating expenses)

42,810.00

51,640.00

14

Dividends payable

23,200.00

19,840.00

15

Common stock, $2 par

150,000.00

100,000.00

16

Paid-in capital: Excess of issue price over par—common stock

417,500.00

280,000.00

17

Retained earnings

1,302,940.00

1,202,490.00

18

Total liabilities and stockholders’ equity

$2,361,420.00

$2,059,300.00

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

1

Sales

$5,368,400.00

2

Cost of goods sold

 3,305,660.00

3

Gross profit

$2,062,740.00

4

Operating expenses:

5

Depreciation expense

$17,180.00

6

Other operating expenses

1,754,452.00

7

Total operating expenses

1,771,632.00

8

Operating income

$291,108.00

9

Other income:

10

Gain on sale of investments

39,110.00

11

Income before income tax

$330,218.00

12

Income tax expense

133,998.00

13

Net income

$196,220.00

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

a. The investments were sold for $280,020 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 $95,770 debit to Retained Earnings for cash dividends declared.

Prepare a statement of cash flows, using the direct method of presenting cash flows from operating activities. Be sure to complete the heading of the statement. Refer to the Labels and Amount Descriptions list provided for the exact wording of the answer choices for text entries. Enter amounts that represent cash outflows as negative numbers using a minus sign.

Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution