Question

The following summary transactions occurred during 2021 for Bluebonnet Bakers:

Cash Received from:
Collections from customers	$	360,000
Interest on notes receivable		7,000
Collection of notes receivable		41,000
Sale of investments		21,000
Issuance of notes payable		110,000
Cash Paid for:
Purchase of inventory		170,000
Interest on notes payable		6,000
Purchase of equipment		66,000
Salaries to employees		71,000
Payment of notes payable		27,000
Dividends to shareholders		22,000

The balance of cash and cash equivalents at the beginning of 2021 was $13,000.

Required:
Prepare the statement of cash flows assuming that Bluebonnet prepares its financial statements according to International Financial Reporting Standards. Where IFRS allows flexibility, use the classification used most often in IFRS financial statements. (Amounts to be deducted should be indicated with a minus sign.)

Answer 1

Amount $ Amount $ Cashflow Statement using Direct Method: Particulars Cashflow from Operating activities: Cash collection from Customers Cash payment for Purchase of Inventory Cash payment for Salaries to employees Net Cash provided by Operating activities (A) 360,000 -170,000 -71,000 119,000 Cashflow from Investing activities: Cash received from Interest on Notes Receivable Cash received from Collection of Notes Receivable Cash received from Sale of Investments Cash payment for Purchase of equipment Net Cash provided by Investing activities (B) 7,000 41,000 21,000 -66,000 3,000 Cashflow from Financing activities Cash received from Issuance of Notes Payable Cash payment for Interest on Notes Payable Cash Payment for Repayment of Notes Payable Cash Payment for Dividends to shareholders Net Cash provided by Financing activities ('C) Net Increase/(Decrease) in Cash (A+B+C) =D Cash balance at the beginning of the year 2021 Cash balance at the end of the year 2021 110,000 -6,000 -27,000 -22,000 55,000 177,000 13,000 190,000