Quest Quality Sportswear (QQS) is an athletic wear company,which manufactures boys, girls, men, and women's clothing. Thecompany is located in NC. QQS is a private company. Therefore,audited financial statements are not available to external users onthe company website.
At Quest Quality Sportswear, the following changes took place onthe company's balance sheet last year:
Note I is for increase and D is for decrease.
| Asset and Contra-Asset Accounts | Liabilities and Stockholders' EquityAccounts |
| Cash and cash equivalents $5 D | Accounts payable $35 I |
| Accounts receivable $110 I | Accrued liabilities $4 D |
| Inventory $70 D | Income taxes payable $8 I |
| Prepaid expenses $9 I | Bonds payable $150 I |
| Long-term investments $6 D | Common stock $80 D |
| Property, plant, and equipment $185 I | Retained earnings $54 I |
| Accumulated depreciation $60 I | |
Other information:
- Long-term investments that cost the company $6 were sold duringthe year for $16
- Land that cost $15 was sold for $9.
- The company declared and paid $30 in cash dividends during theyear.
- Besides the sale of land, no other sales or retirements ofplant and equipment took place during the year.
- QQS did not retire any bonds during the year or issues any newcommon stock.
- QQS's beginning cash balance was $90.
- QQS's ending cash balance was $85.
QQS's income statement for the year follows:
| Sales | | $700 |
| Cost of goods sold | | 400 |
| Gross margin | | 300 |
| Selling and administrative expenses | | 184 |
| Net operating income | | 116 |
| Nonoperating items: | | |
| Loss on the sale of land | $(6) | |
| Gain on the sale of investments | 10 | 4 |
| Income before taxes | | 120 |
| Income taxes | | 36 |
| Net income | | $84 |
1. Use the indirect method to determine the net cash provided byoperating activities for the year.
2. Prepare a statement of cash flows for the year.
Be sure to show your work. Not doing so will result indeductions and/or no credit given
