Question

How do I calculate the Operating Expenses on Cash Flow Statement?

METRO MEATS LTD P&L statement for 2015 METRO MEATS LTD Statement of Financial Position as at 31 December Sales revenue 250,000 Cost of sales 2015 2014 Assets 210,000 Cash Accounts receivable Gross profit 29,000 $ 15,000 40,000 28,000 14,000 Less: Inventories Selling expenses 18,000 25,000 35,000 Property, plant & equipment Accumulated depreciation Administrative expenses 6,000 60,000 78,000 (20,000) 122,000 $ (24,000) 2,000 Interest Total Income taxes 4,000 118,000 30,000 Liabilities and equity Profit 10,000 Accounts payable Dividends payable Income tax payable Debentures payable Share capital Retained earnings 26,000 $ 25,000 3,000 0 Additional information: 1. Metro paid a $2,000 interim dividend & declared a final dividend 5,000 8,000 2. Equipment sold for $8,500 cash, original cost of $18,000 and carrying value of $8,500 at the time of sale. 3. All depreciation expense is in the selling expense category 4. All operating expenses except for depreciation paid in cash 27,000 33,000 18,000 14,000 43,000 38,000 122,000 $118,000 Total Required: Complete the statement of cash flows for 2015 below. METRO MEATS Ltd Statement of Cash Flows for the year ended 31 December 2015 USE CELL REFERENCES FOR $ VALUE ENTRIES. Cash flows from operating activities: Cash receipts from customers 236,000 Cash payments: To suppliers 199,000 7,000 For income taxes 8,000 For interest For other/operating expenses $value value

Answer 1

Original cost of equipment sold = $18,000

Carrying value of equipment = $8,500

Accumulated depreciation on equipment sold = Original cost of equipment sold - Carrying value of equipment

= 18,000 - 8,500

= $9,500

Depreciation expense for the current year = Accumulated depreciation on December 31, 2015 + Accumulated depreciation on equipment sold - Accumulated depreciation on December 31, 2014

= 20,000 + 9,500 - 24,000

= $5,500

Selling expenses = $18,000

Selling expenses include depreciation expense

Administrative expenses = $6,000

Operating expenses paid = (Selling expenses - Depreciation expense) + Administrative expenses

= 18,000 - 5,500 + 6,000

= $18,500

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