Question

End of Chapter Exercise 18.10 The following comparative statements of financial position and income statement are for the business of Bargains Galore Pty Ltd: Bargains Galore Pty Ltd Comparative statements of financial position as at 30 June 2019 2020 Assets Cash at bank $21,000 $30,000 Accounts receivable 77,000 63,000 Inventory 56,000 71,350 Prepaid expenses 40,000 32,000 Plant and equipment 700,000 749,000 Accumulated depreciation - plant and equipment (150,000) (190,000) $744,000 $755,350 Liabilities and equity Accounts payable $236,000 $207,000 Expenses payable 24,000 34,000 Current tax liability 49,000 45,000 Share capital 300,000 300,000 Retained earnings 135,000 169,350 $744,000 $755,350

Answer 1

$96,000 Bargains Galore Pty Ltd Statement of Cash flows For the Year Ended 30 June 2020 Cash flows from Operating Activities Cash receipts from customers $829,000 Cash paid to suppliers and employees ($681,000) Cash generated from operations $148,000 Income taxes paid ($52,000) Net Cash provided by Operating Activities Cash flows from Investing Activities Purchase of Plant ($49,000) Net Cash from Investing Activities Cash flows from Financing Activities Cash dividend paid ($38,000) Net Cash from Financing Activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year Working notes: T- Accounts ($49,000) Cash dividend Closing balance Retained Earnings $38,000 Opening balance $169,350 Net Income $207,350 $135,000 $72,350 $207,350 ($38,000) $9,000 $21,000 $30,000 Working notes: a) Amount of cash received from Customers Service revenue Add: Decrease in accounts receivable Net cash received from customers $815,000 $14,000 $829,000 b) Cash paid to suppliers and employees Cost of inventory purchased Cost of sales Add :Increase in inventory Merchandise purchase $415,650 $15,350 $431,000 Amount of cash paid to suppliers of merchandise cost of purchase $431,000 Add: Decrease in Accounts payable $29,000 Cash paid to Suppliers $460,000 c) Amount of cash paid for employees Wag and salaries Other expense Net expense Less: Decrease in prepaid expense Less: Increase in accrued expense Net cash paid for operating expenses $163,000 $76,000 $239,000 -$8,000 -$10,000 $221,000 d) Cash paid for Income taxes Income tax expense Add: Decrease in current tax liability Cash paid for Income taxes $48,000 $4,000 $52,000