Question

yies Question #2 (25 marks) The comparative unclassified Balance Sheet for Company Q as follows: COMPANY Q LTD. BALANCE SHEET December 31 2019 2018 Assets Cash $ 53,000 $ 22,000 Accounts receivable 80,000 76,000 Merchandise inventory 185,000 189,000 Land 70,000 100,000 Equipment 265,000 200,000 Accumulated depreciation (66,000) (17,000) Total assets $587,000 $555,000 Liabilities and Shareholders' Equity Accounts payable $ 39,000 $ 47,000 Bank loan payable 150.000 200.000 Common shares 199,000 174,000 Retained earnings 199,000 134,000 Total liabilities and shareholders' equity $587,000 $555,000 Additional information: 1. Profit was $100,000.

Answer 1

Solution

Total assets of 2018 are $570,000 not 555,000. I have solved answer on the basis of balance sheet provided.

COMPANY Q LTD
Statement of Cash Flows
For the Year Ended December 31, 2019
Cash flows from operating activities:
Net income		$        100,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense	$       49,000
Gain on sale of land	$        (5,000)
Incease in accounts receivables	$        (4,000)
Decrease in inventory	$         4,000
Decrease in accounts payable	$        (8,000)
		$         36,000
Net cash from Operating Activities		$        136,000
Cash flows from investing activities:
Sale of land	$       35,000
Purchase of Equipment	$        (65,000)
Net cash from Investing Activities		$        (30,000)
Cash flows from financing activities:
Retirement of loans	$      (50,000)
Issue of Common stock	$       25,000
Dividends paid	$      (35,000)
Net cash from Financing Activities		$        (60,000)
Net change in cash during the year		$         46,000
Add: Beinning cash balance		$         22,000
Ending cash balance		$         68,000