Question

P13-12A The income statement and unclassified statement of financial position for E-Perform, Inc. follow: E-PERFORM, INC. Statement of Financial Position December 31 2017 2018 Assets Cash $ 97,800 Held for tradinginvestments 128,000 Accounts receivable 75,800 Inventory 122.500 Prepaid expenses 18,400 Equipment 270,000 Accumulated depreciation (50.000) Total assets $662,500 Liabilities and Shareholders' Equity Accounts payable $ 93,000 Accrued liabilities 11,500 Bank loan payable 110,000 Common shares 200,000 Retained earnings 248.000 Total liabilities and shareholders' equity $662,500 E-PERFORM, INC. Income Statement Year Ended December 31, 2018 $ 48,400 114,000 43,000 92,850 26,000 242,500 (52.000) $514.750 $ 77,300 7,000 150,000 175,000 105.450 $514.750 Sales Cost of goods sold S492.780 185.460

Answer 1

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Part a
Operating activities
Net income		$                      155,180
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation expense	$                         46,500
Loss on disposal of equipment	$                           7,500
Unrealized gain on held for trading investments	$                      (14,000)
Increase in accounts receivable	$                      (32,800)
Increase in inventory	$                      (29,650)
Decrease in prepaid expenses	$                           7,600
Increase in accounts payable	$                         15,700
Increase in accrued liabilities	$                           4,500	$                           5,350
Net cash provided by operating activities		$                      160,530
Investing activities
Proceeds from disposal of equipment	$                           1,500
Purchase of equipment (Note A)	$                      (25,000)
Net cash used by investing activities		$                      (23,500)
Financing activities
Sale of common shares	$                         25,000
Repayment of bank loan payable	$                    (100,000)
Payment of cash dividends	$                      (12,630)
($105,450 + $155,180 – $248,000)
Net cash used by financing activities		$                      (87,630)
Net increase in cash		$                         49,400
Cash, January 1		$                         48,400
Cash, December 31		$                         97,800
Note A to the Statement of Cash Flows:
During the year, the company purchased equipment costing $85,000 by paying$25,000 cash and issuing a $60,000 bank loan payable.
Part b
E-Perform’s cash position has increased primarily because of significant amounts of cash generated from its operating activities.
Cash from operating activities increased the company’s cash account by $160,530.
Some of this cash was used to purchase equipment, repay its bank loans and pay dividends, but sufficient cash remained at the end of the year to increase its cash position by $49,400.