Question

The following information is for Harley Holdings Ltd. for the year ended January 31, 2020. HARLEY HOLDINGS LTD. Statement of Financial Position As at January 31 2020 2019 Assets Current assets: Cash $40,000 $29,200 Accounts receivable 69,440 44,000 Inventory 76,480 81,360 Total current assets 185,920 154,560 Equipment 140,000 116,000 Accumulated depreciation, equipment (34,800) (31,200) Land 96,000 136,000 $387,120 $375,360 Liabilities and shareholders' equity Current liabilities: Accounts payable $36,240 $49,760 Dividends payable 10,400 4,000 Total current liabilities 46,640 53,760 Bank loan payable 80,000 112,000 Common shares 120,000 104,000 Retained earnings 140,480 105,600 $387,120 $375,360 HARLEY HOLDINGS LTD. Statement of Income For the year ended January 31, 2020 Sales revenue $348,000 Cost of goods sold 236,000 Gross profit 112,000 Expenses Wages expense $12,160 Depreciation expense 21,200 Rent expense 12,080 Income tax expense 11,760 57,200 Operation income 54,800 Gain on sale of equipment 800 Net income $55,600 Additional information: 1. Equipment costing $28,000 was sold for $11,200. 2. Land was sold at cost and none was purchased during the year.

Answer 1

Answer-

HARLEY HOLDING LTD.
STATEMENT OF CASH FLOWS (USING INDIRECT METHOD)
FOR THE YEAR ENDED DECEMBER 31, 2020
Particulars		Amount
		$
Cash flow from operating activities
Net Income		55600
Adjustments to reconcile net income to net cash provided by operating activities
Adjustment for non cash effects
Depreciation expense		21200
Gain on sale of equipment		-800
Change in operating assets & liabilities
Increase in Accounts receivable		-25440
Decrease in inventory		4880
Decrease in accounts payable		-13520
Net cash flow from operating activities (a)		41920
Cash Flow from Investing activities
Old Equipment sold		11200
Land sold		40000
New equipment purchased		-52000
Net cash Flow from Investing activities (b)		-800
Cash Flow from Financing activities
Cash dividends paid		-14320
Common stock issued		16000
Bank loan paid		-32000
Net cash Flow from Financing activities (c)		-30320
Net Change in cash c=a+b+c		10800
Beginning cash balance		29200
Closing cash balance		40000

Supplementary Disclosures-

Cash paid for Income Taxes= $11760.