Question

Take me to the text The balance sheet and income statement for Elizabeth Hotels are presented below. Elizabeth Hotels Balance Sheet As at December 31 2020 2019 Assets Current Assets Cash $125,370 $76,200 Accounts Receivable $44,200 $28,900 Inventory $76,100 $46,400 Total Current Assets $245,670 $ 151,500 Land $101,000 $107,000 Equipment $92,000 $132,000 Accumulated Depreciation $-49,000 $-65,000 Total Assets $389,670 $325,500 Liabilities and Equity Liabilities Current Liabilities Accounts Payable $39,000 $65,900 Taxes Payable $28,700 $28,700 Total Current Liabilities $67,700 $94,600 Notes Payable $120,700 $85,300 Total Liabilities $188,400 $179,900 Shareholders' Equity Common Shares $80,000 $66,000 Retained Earnings $121,270 $79,600 Total Shareholders' Equity $ 201,270 $145,600 Total Liabilities and Equity $389,670 $325,500 Notes: The company paid cash dividends during 2020. The company did not make a notes payable payment during 2020. The company did not purchase any equipment during 2020. The company did not purchase any land during 2020.

Answer 1

Elizabeth Hotels Statement of Cash Flows (Indirect Method) For the Year Ended October 31, 2020 (in millions) Cash Flow from Operating Activities: Net Income $65,870 Adjustments to Non-Cash Items: Depreciation expense $9,000 [Non-cash expense and so added back] Loss on disposal of equipment $7,400 [Non-cash expense and so added back] Gain on sale of land $5,300 [Non-cash income and so deducted back] Changes in Current Assets and Current Liabilities: Increase in Accounts Receivable $15,300 [$44200 - $28900 --> It would increase working capital requirement & so negative] Increase in Inventory -$29,700 [$76100 - $46400 --> It would increase working capital requirement & so negative] Decrease in Accounts Payable $26,900 $60,800 [$65900 - $39000 --> It would increase working capital requirement & so negative) Change in Cash Due to Operating Activities $5,070 Cash Flow from Investing Activities: Sale of Equipment Sale of Land Net Cash Provided by (Used in) Investing Activities $7,600 $11,300 [Ref: Workings] [Ref: Workings] $18,900

$14,000 $35,400 $24,200 Cash Flow from Financing Activities: Issuance of Common Shares Proceeds from Notes Payable Payment of Dividends Net Cash Provided by (Used in) Financing Activities Net Increase (Decrease) in cash Add: Cash at the Beginning of the Year Cash at the End of the Year [$80,000 - $66,000 (Ref: Common shares account)] ($120,700 - $85,300 (Ref: Note payable account)] [$79,600 + $65,870 - $121,270] $25,200 $49,170 $76,200 $125,370 Workings: Accumulated depreciation, beginning of the year Add: Depreciation expense for the year Less: Accumulated depreciation, end of the year Accumulated depreciation on equipment sold Cost of equipment sold during the year Book value of the equipment sold Loss on disposal of equipment Cash received from selling equipment Land, beginning of the year Less: Land, end of the year Cost of the land sold Add: Gain on sale of land Cash received from selling land $65,000 $9,000 -$49,000 $25,000 $40,000 ($132,000 - $92,000 (Ref: Equipment account)] $15,000 $7,400 $7,600 $107,000 $101,000 $6,000 $5,300 $11,300