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Question: The following changes took place last year in Pavolik Company’s balance sheet accounts: &nbsp…
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The following changes took place last year in Pavolik Company’s
balance sheet accounts:

  

Asset and Contra-Asset Accounts

Liabilities and Equity Accounts

  Cash

$

20   

D

  Accounts payable

$

62   

I

  Accounts receivable

$

24   

I

  Accrued liabilities

$

24   

D

  Inventory

$

58   

D

  Income taxes payable

$

29   

I

  Prepaid expenses

$

19   

I

  Bonds payable

$

204   

I

  Long-term investments

$

21   

D

  Common stock

$

96   

D

  Property, plant, and equipment

$

395   

I

  Retained earnings

$

82   

I

  Accumulated depreciation

$

82   

I

D = Decrease; I = Increase.

  

      Long-term investments that
had cost the company $21 were sold during the year for $46, and
land that had cost $45 was sold for $24. In addition, the company
declared and paid $18 in cash dividends during the year. Besides
the sale of land, no other sales or retirements of plant and
equipment took place during the year. Pavolik did not retire any
bonds during the year or issue any new common stock.

  

The company’s income statement for the year follows:

   

  

  Sales

$

1,020  

  Cost of goods sold

446  

  Gross margin

574  

  Selling and administrative expenses

420  

  Net operating income

154  

  Nonoperating items:

      Loss on sale of land

$

(21)   

      Gain on sale of
investment

25    

4  

  Income before taxes

158  

  Income taxes

58  

  Net income

$

100  

  

The company’s beginning cash balance was $128 and its ending
balance was $108.

  

Required:

1.

Using the indirect method, determine the net cash provided by /
used in operating activities for the year. (List any
deduction in cash and cash outflows as negative
amounts.)

   

2.

Prepare a statement of cash flows for the year. (List
any deduction in cash and cash outflows as negative
amounts.)

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