Reference no: EM131841022
Problem - Cavett Company's comparative balance sheet and income statement for last year appear below:
Comparative Balance Sheet
Ending Balance Beginning Balance
Assets:
Cash $ 45,000 $ 30,000
Accounts receivable 38,000 40,000
Inventory 67,000 60,000
Long-term investments 162,000 200,000
Property, plant and equipment 178,000 150,000
Less accumulated depreciation 52,000 50,000
Total assets $ 438,000 $ 430,000
Liabilities and stockholders' equity:
Accounts payable $ 36,000 $ 40,000
Accrued liabilities 24,000 30,000
Income taxes payable 15,000 20,000
Bonds payable 20,000 30,000
Common stock 295,000 270,000
Retained earnings 48,000 40,000
Total liabilities and stockholders' equity $ 438,000 $ 430,000
Income Statement
Sales $ 250,000
Cost of goods sold 100,000
Gross margin 150,000
Selling and administrative expenses 90,000
Net operating income 60,000
Loss on sale of investment 5,000
Income before taxes 55,000
Income taxes 22,000
Net income $ 33,000
The following additional information is available for the year:
During the year, the company sold long-term investments with a cost of $38,000 when purchased for $33,000 in cash.
All sales were on credit.
The company paid a cash dividend of $25,000.
The company did not dispose of any property, plant, and equipment, issue any bonds payable, or repurchase any of its own common stock during the year.
Required:
a. Using the direct method, determine the net cash provided by operating activities for the year.
b. Using the indirect method, determine the net cash provided by operating activities for the year.
c. Using the net cash provided by operating activities figure from either part a or b, prepare a statement of cash flows for the year.