The following changes took place last year in Pavolik Company’s balance sheet accounts: Asset and Contra-Asset Accounts Liabilities and Stockholders' Equity Accounts
Cash $5D Accounts payable 5I
Accounts receivable$110 I Accrued liabilities $4D
Inventory $70D Income taxes payable $8I
Prepaid expenses $9I Bonds payable $ 150I
Long-term investments $6D Common stock $ 80D
Property, plant, and equipment$185I Retained earnings $54I
Accumulated depreciation $60I
D = Decrease; I = Increase.
Long-term investments that cost the company $6 were sold during the year for $16 and land that cost $15 was sold for $9. In addition, the company declared and paid $30 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 $ 700
Cost of goods sold 400
Gross margin 300
Selling and administrative expense 184
Net operating income 116
Nonoperating items:
Loss on sale of land $ (6)
Gain on sale of investments 10 4
Income before taxes 120
Income taxes 36
Net income $ 84
The company’s beginning cash balance was $90 and its ending balance was $85.
Required:
2. Prepare a statement of cash flows for the year.