Question

The following data relate to Emporium Ltd: Emporium Ltd Income statement for year ended 30 June 2020 Income Sales revenue $1,245,000 Expenses Cost of sales $720,000 Depreciation - machinery 30,000 Depreciation – buildings 18,000 Other expenses 335,500 1,103,500 Profit $141,500

Answer 1

Emporium Ltd				Workings:
Statement of Cash Flows				Purchase from suppliers
For the Year Ended 30 June 2020				- Beginning Inventory	(112,000)
Cash flows from operating activities				+ Cost of sales	720,000
Cash receipts from customers	1,256,000			+ Ending Inventory	152,000
Cash paid to suppliers and employees	(1,084,000)				760,000
Cash generated from operations	172,000
Net cash flows from operating activities		172,000		Cash paid for suppliers
				Beginning AP	45,700
				+ purchase from suppliers	760,000
				- Ending AP	(60,700)
					745,000
				Cash paid to employees:
				+ Beginning expenses payable	6,300
				+ Other expenses	335,500
				- Ending expenses payable	(2,800)
					339,000
Reconciliation of net cash from operating activities to profit
Profit for the period		141,500
Depreciation–machinery		30,000
Depreciation–buildings		18,000
Changes in current assets and current liabilities:
Decrease in accounts receivable	11,000
Increase in inventory	(40,000)
Increase in accounts payable	15,000
Decrease in expenses payable	(3,500)
		(17,500)
Net cash from operating activities		172,000