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 670,000 Less: Cost of Goods Sold 340.000 Gross Profit 330,000 Less: Selling, General and Administrative Expenses 85.000 Operating profit 245,000 Less: Depreciation expense 55,000 Earnings before interest and taxes 190,000 Less: Interest expense 25,000 Earnings before taxes 165,000 Less: tax expense (40%) 66.000 Net Income 99,000 Doone Corporation Comparative Balance Sheet Dec 31, 2018 and 2019 2012 Cash 12,000 16,000 Marketable securities 23,000 24,000 Accounts receivables 50,000 65,000 Inventory 60,000 55,000 Investments 62.000 51.000 Total current assets 207,000 211,000 Property, Plant & Equipment 540,000 630,000 Less: Accumulated Depreciation 55.000 75,000 Net Prop., Plant & Equipment 485,000 555,000 2018

Answer 1

Note : Based on the Details provided the cash flow from operating activities and investing activities have been prepared. Cash flow from Finacing activities is not been prepared as the required data was not provided.

Answer :

	CAD	CAD
CASH FLOW FROM OPERATING ACTIVITIES
Net profit before Tax and Extra-ordinary Items		165,000
Adjustment for non cash and non-operating items & changes in Working Capital
Depreciation	55,000
Increase in Marketable securities (24000-23000)	(1,000)
Increase in Accounts Receivables (65000-50000)	(15,000)
Decrease in Inventory (60000-55000)	5,000
Cash generated from Operations		44,000
Less : Income Tax paid		(66,000)
Net Cash Flow from Operating Activities		143,000
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from Sale of Investment (62000-51000)	11,000
Purchase of Property, Plant and Equipment (W1)	(125,000	)
Net Cash Flow from Investing Activities		(114,000)

W1:  

Property, Plant and Equipment
Balance net of accumulated depreciation as on Dec 31, 2019	555,000
Less: Balance net of accumulated depreciation as on Dec 31, 2018	(485,000)
Add: Depreciation for the year ended 31 Dec,2019	55,000
Purchase during the year ended 31 Dec, 2019	125,000