Question

Question 2 You are provided with Beck Carriage Balance Sheet in Table 1. Table 1: Beck Carriage Balance Sheet (in Dollars) Calculation for Cash Flow Statement CF 2017 2018 Working Value Type as of 31 December Assets Cash Accounts receivable Inventory Prepaid expenses Other current assets Total Current Assets Property, plant and equipment Accumulated depreciation Net property, plant and equipment Total Assets 8.000 2.500 65.000 1.500 500 77,500 12.000 -2.400 9.600 87,100 3,368 2.200 71,500 1.800 600 79,468 17.400 -3.480 13.920 93,388 Liabilities Accounts payable Line of credit Current portion of long-term debt Accrued expenses Total Current Liabilities 3.000 10.000 4.000 1.100 18,100 3.200 10,000 4.000 1.100 28,300 Long-term debt 16,000 10,000 Total Liabilities 34,100 30,300 Owner's Equity Contributed capital Retained earnings 50.000 3,000 52.000 13,088 Total Owner's Equity 53,000 65,088 CFO = Cash Flow from Operating Activities CFI = Cash Flow from Investing Activities CFF = Cash Flow from Financing Activities Total Liabilities and Equity 87,100 93,388 (a) Calculate the cash flow statement items for Beck Carriage in Table 1 and differentiate the type of cash flow. (10 marks) Compute and complete the cash flow statement for Beck Carriage in Table 2 below using the Indirect Method. Table 2: Beck Carriage Statement of Cash Flows for the year ended 31 December 2018 Net Income 10,088 Cash Flow from Operating Activities Cash Flow from Investing Activities Cash Flow from Investing Activities Cash Flow from Financing Activities Cash Flow from Financing Activities Net Change in Cash Beginning Cash Balance Ending Cash Balance 8,000 3,368 (10 marks)

Answer 1

1)

	$	$
Assets	2017	2018	Working	Value	CF Type
Cash	8,000	3,368
A/R	2,500	2,200	2200-2500	-300	Operating
Inventory	65,000	71,500	71500-65000	6,500	Operating
Prepaid exp	1,500	1,800	1800-1500	300	Operating
Other current assets	500	600	600-500	100	Operating
Total Current Assets	77,500	79,468
PP&E	12,000	17,400	17400-12000	5,400	Investing
Acc dep	-2,400	-3,480	3480-2400	1080	Operating	Dep expense
Net PP&E	9,600	13,920
Total Assets	87,100	93,388
Liabilities
Accounts Payable	3,000	3,200	3200-3000	200	Operating
Line of credit	10,000	10,000	10,000-10,000	0	Financing
Current portion of long term debt	4,000	4,000	4000-4000	0	Financing
Accrued expenses	1,100	1,100	1100-1100	0	Operating
Total Current liab	18,100	28,300
Long term debt	16,000	10,000	10000-16000	-6,000	Financing
Total Liab	34,100	30,300
Owner's equity
Contributed Capital	50,000	52,000	52000-50000	2,000	Financing
Retained earnings	3,000	13,088	13,088-3000	10,088	Operating	Net Income
Total Liab and equity	87,100	93,388

        

2)

Statement of Cash flow for the year ended Dec 31, 2018 Net Income Add: Non cash expenses depreciation) Add:Decrease in Accounts receivable less: Increase in Inventory less: Increase in prepaid expenses less: Increase in other current assets Add: Increase in Accounts Payable Net cash flow from operating activity(A) 10,088 1080 300 -6500 -300 -100 200 4,768 Cash flow from investing activity PP&E purchased Net cash used in investing activity(B) -5400 -5400 Cash flow from financing activity Long term debt paid Capital contributed during the year Net cash used in financing acitvity(c) -6000 2000 -4000 Net change in Cash(A+B+C) Beginning cash balance ending cash balance -4,632 8000 3,368