Question

Below are the income statement and comparative balance sheet of Doone Corporation for year ending Dec 31, 2019 is given below. All amounts in Canadian dollars. Required: Prepare the cashflow statement, clearly including operating, financing and investing activities up to the net change in cash using the Indirect method as of Dec 31, 2019. Doone Corporation Income Statement For the Year ended Dec 31, 2019 Sales Revenue 880,000 Less: Cost of Goods Sold 520.000 Gross Profit 360,000 Less: Selling, General and Administrative Expenses 71.000 Operating profit 289.000 Less: Depreciation expense 50,000 Earnings before interest and taxes 239,000 Less: Interest expense 44,000 Earnings before taxes 195.000 Less tax expense (40%) 78,000 Net Income 117,000 Cash Marketable securities Accounts receivables Inventory Investments Total current assets Doon Corporation Comparative Balance Sheet Dec 31, 2018 and 2019 2018 2019 12,000 16,000 23,000 24,000 65,000 76,000 69,000 58,000 58.000 45.000 227,000 219.000 Property, Plant & Equipment Less: Accumulated Depreciation Net Prop. Plant & Equipment Total Assets 510,000 42.000 468,000 695,000 670,000 50,000 620,000 839,000 Accounts payable Notes payable Accrued expenses Salaries payable Total current liability Bonds payable Total liabilities 68,000 20,000 11.000 6,000 105,000 230.000 335,000 57.000 10,000 7.000 9.000 83.000 315.000 398,000 Share capital Retained Earnings Total Shareholder's equity 250,000 110.000 360,000 300,000 141.000 Total Liabilities and Shareholders equity 695,000 839,000

Answer 1

Doone Corporation
Cash Flow Statement
For the Year Ended 31 December, 2019
Particulars	Amount	Amount
Cash flow from operating activities:
Net profit before income tax	195,000
Adjustment for non-cash items
Add: Depreciation expense	50,000
Adjustment for non-operating items
Add: Interest expense	44,000
Adjustment for working capital changes
Add: Decrease in Current Assets
Inventory	11,000
Investments	13,000
Add: Increase in Current Liabilities
Bonds Payable	3,000
Less: Increase in Current Assets
Marketable securities	(1,000)
Accounts receivables	(11,000)
Less: Decrease in Current Liabilities
Accounts payables	(11,000)
Notes payables	(10,000)
Accrued expenses	(4,000)
	279,000
Less: Income tax paid	(78,000)
Net cash inflow from operating activities		201,000
Cash flow from investing activities:
Purchase of PPE (see Working Note - 2)	(202,000)
Net cash outflow from investing activities		(202,000)
Cash flow from financing activities:
Issue of Bonds (315,000 - 230,000)	85,000
Issue of shares (300,000 - 250,000)	50,000
Dividend paid (see Working Note - 3)	(86,000)
Interest expense	(44,000)
Net cash outflow from financing activities		5,000
Net increase in cash and cash equivalents		4,000
Add: Cash balance at the beginning as on January 1, 2019		12,000
Cash balance at the end as on December 31, 2019		16,000
Note: Interest expense and dividend is assumed as paid

Working Note - 1
Accumulated Depreciation
Particulars	Amount	Particulars	Amount
		Opening Balance	42,000
To Property, Plant and Equipment	42,000
(Balancing figure)		By Depreciation	50,000
		(current year)
Closing Balance	50,000
	92,000		92,000
Working Note - 2
Property, Plant and Equipment
Particulars	Amount	Particulars	Amount
Opening Balance	510,000
		By Accumulated Depreciation	42,000
To Cash	202,000	(Working Note-1)
(Balancing figure)		Closing Balance	670,000
	712,000		712,000
Working Note - 3
Retained Earnings
Particulars	Amount	Particulars	Amount
		Opening Balance	110,000
To Dividend paid	86,000
(Balancing figure)		By Income Statement	117,000
		(current year profit)
Closing Balance	141,000
	227,000		227,000