Question

Required: Prepare Alrich Farms statement of cash flows for fiscal 2015 using the indirect method.

Page 4 9B17B008 EXHIBIT 1: ALRICH FARMS STATEMENT OF EARNINGS YEAR ENDED DECEMBER 31, 2015 (IN CANADIAN DOLLARS) REVENUE Crop revenue Livestock revenue $198,465 26,278 224,743 Variable crop costs Variable livestock costs 125,665 Contribution 91,107 FIXED COSTS 5,488 15,911 3,208 3,330 46,924 (3,944) 18,507 35,000 8,687 Fuel-machinery & vehicle Maintenance-machinery & vehicle Insurance-machinery & vehicle Equipment repairs Loss on sale of equipment Gain on trade-in of machinery Depreciation-fixed assets Salaries Interest General & administration Totai fixed costs 144 133 Net income before taxes (53,026) Income taxes Net income after taxes 53026 Note: Fixed assets were depreciated using the straight-line method; n fiscal 2014、Alrich Farms's net income was $3,042 on gross revenues of $224,560 Source: Company files. EXHIBIT 2: ALRICH FARMS STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31 (IN CANADIAN DOLLARS) ASSETS Current assets 2015 2014 Cash $ (58,620) $ (47,430) 4,487 11,585 (31,358) 6,477 14,52 (37,614) Total current assets Fixed assets: Land Land improvements, drainage Less: Accumulated depreciation Machinery & vehicle $ 478,000 68,157 141,568 (50,195)_47.063 (39,938)86,775 $ 478,000 $100,317 $ 100,317 -132160) 198,518 (61.180 147,268 (56,950) 126,713 361801 64,137 208,448 Equipment Less: Accumulated depreciation 97,258 Total fixed assets Total assets LIABILITIES& SHAREHOLDERS' EQUITY Current liabilities 736,468 774,500 $743,142 $ 2,454 3,500 6,750 12,704 $ 4,454 3,500 6,750 14,704 Accounts payable Current portionFarm Credit Canada Current portionT&E Total current liabilities Bank loan payable 27,352 4,775 1,589 99,457 48,750 50,000 204,571 Mortgage payable-Farm Credit Canada Mortgage payable-R&E Promissory note-T&E 95,957 42,000 50,000 215,309 Total long-term liabilities Total liabilities 228,013 219,275 Sharehoiders' equity Common stock Retained earnings Total shareholders' equity 100 470,741 470,841 100 767 523,867 Total liabilities and shareholders' equity S 698 854 $743.142 Notes: The Alrich farm had a $85,000 overdraft limit at the bank: T&E was an arm's-length financial institution of the local municipal township: R&E was a loan from the previous generation of the Alrich family Source: Company files.

Answer 1

ALRICH FARMS Statement of Cash Flow (Indirect Method) For the Year Ended December 31, 2015 Cash flow from operating activiti Net Income after taxes Ad Depreciation fixed asset 53,026 urrent Ass 18,507 18,507 Less: Increa Accounts receivable Inventory Accounts payable 1,990 2,944 2,000 6,934 (41,453) Cash flow from operating activities Cash flow from investing activities: Sale of equipment (126713-97258) 29,455 29,455 9,930 Less: Purchase of machinery (208448-198518) Cash flow from investing activities 19,525 Cash flow from financing activities Increase in additional paid-in capital Loan taken (27352-4775) 22,577 22,577 1,589 3,500 6,750 Less: Loan repaid Township Mortgage loan repaid Farm credit (99457-95957) Mortgage loan repaid R&E (48750-42000) Cash flow from financing activities Change in Cash Add: Cash at the beginning of the year Cash at the end of the year 10,738 (11,190) 47,430 (58,620)