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Exercise 14-4 Prepare a Statement of Cash Flows [LO14-1, LO14-2]

The following changes took place last year in Pavolik Companys balance sheet accounts:

Asset and Contra-Asset Accounts				Liabilities and Equity Accounts
Cash	$	34	D	Accounts payable	$	104	I
Accounts receivable	$	38	I	Accrued liabilities	$	38	D
Inventory	$	86	D	Income taxes payable	$	43	I
Prepaid expenses	$	33	I	Bonds payable	$	316	I
Long-term investments	$	35	D	Common stock	$	152	D
Property, plant, and equipment	$	605	I	Retained earnings	$	124	I
Accumulated depreciation	$	124	I

D = Decrease; I = Increase.

Long-term investments that had cost the company $35 were sold during the year for $74, and land that had cost $73 was sold for $38. In addition, the company declared and paid $32 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 companys income statement for the year follows:

Sales			$	1,440
Cost of goods sold				642
Gross margin				798
Selling and administrative expenses				560
Net operating income				238
Nonoperating items:
Loss on sale of land	$	(35)
Gain on sale of investment		39		4
Income before taxes				242
Income taxes				86
Net income			$	156

The companys beginning cash balance was $156 and its ending balance was $122.

Required:

1.

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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