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

Cash Flow from Operating Activities Net Profits/Net Income 99,000 Add: Depriciation Add: Interest Expenses Add: Change in retained earnings Cash Flow Before Adjusting Current Assets or Liabilities (1) 55,000 25,000 (27,000) 152,000 Adjustment for Increase or Decrese in Current assets or Liabilities Less Decrease in Salary Payable Less Decrease in Accrued Expenses (4,000) (4,000) 2) (8,000) Add: Increase in Accounts Payable Add: Decrease in Current Investments Add: Decrease in Inventory 14,000 11,000 5000 30,000 3) A) Cash Flow from Operating Activities 174,000

Purchase of Property plant and Equipment -145000 B) Cash Flow from Investing Activities -145000 Interest paid C) Cash Flow from Financing Activities (25,000) (25,000) Cash Generated During The Year Add: Opening Cash Balance 4,000 12000 Closing Cash At the year End 16,000

since, the retained earnings are nothing but merely an entry to transfer the profit to reserves, hence no adjustment.

and the bonds payable are not taken in the question with the assumption that the, new bonds are not issued and only the interest payable amount is added to the bonds liability.

also most of the details regarding current assets and liability are missing, hence this solution is based on assumptions. thanks