Question

* Question 6 The comparative unclassified statement of financial position for Sunland Ltd. follows: SUNLAND LTD. Statement of Financial Position December 31 Assets 2018 Cash $54,000 Accounts receivable 85,000 Inventory 182,000 Long-term investments 79,000 Equipment 265,000 Accumulated depreciation (65,000) Total assets $600,000 2017 $29,000 74,500 195,500 110,000 156,000 (33,000) 5532,000 Liabilities and Shareholders' Equity Accounts payable $36,000 Bank loan payable 126,000 Common shares 219,000 Retained eamings 219,000 Total liabilities and shareholders' equity $600,000 $ 45,000 184,000 171,000 132,000 $532,000 Additional information: 1. Net income was $98,700. 2. Sales were S970,000. 3. Cost of goods sold was 5758,000. 4. Operating expenses were $44,000, exclusive of depreciation expense. 5. Depreciation expense was $32,000. 6. Interest expense was $14,000. 7. Income tax expense was $29,000. 8. Long-term investments were sold at a gain of $5,700. 9. No equipment was sold during the year. 10. $58,000 of the bank loan was repaid during the year. 11. Common shares were issued for $48,000.

Answer 1

SUNLAND LTD. statement of Cash Flows c Direct Method). on the Year Ended December 31 Particular | Amount (6) O Cash Flows from Operating Activities! Cash received from Customer (w wol 959,500 Cash loyment to suppliers (w. No) (753,500) Co.sh paid for operating expenses (44,000) | Cash paid for Interest ( 14.000 Cash mid for income taxes 129000) Net Cash Provided by Operating Activities 119.000 Cash Flows From Inverting Aebrities : Purchase of equipment (W.NO) . Sale proceeds from Investment sele (W.NG) Net Cash used in Investing Activities loqooo) 36000 (92300) 6 Cash Flows from Financing Activitigs! Proceeds from issuance of equity shares Bank loan repaid Dividend paid (w .NO) Net Cash used in Financing Actistes. Net Increase in Cash (①+0+6) Acash at the beginning of the period Cash at end of the period 48,000 68.000) OL 700) (1200) 25,000 54,000

working Note : Cash Received from Customers. - Particulars Total sales dessing december Add: Accounts receivable in 2017 Less Accounts receivable in 2018 Cash Received from Customers 1990 coo 74,500 959.5ook o laugh Payment to supplions! I - Cost of Goods sold or opening Inventry & Purchases -closing Inventory =) Purchones - cost of goods sold at closing Inventory - opening Preventing - 9580oof 182,000 -1,95,500 744,500 particulars Total Purchases Add: Accounts Payable in 2012 Less: Accounts Payable in 2018 Cash paid to suppliers 744, 500 As,ooo 36.000 7,53,500

6 Purchase of Feuipment : Particular Equipment value in Balance sheet in 2018 265,000 Less Equipment value in Balance sheet in 2017 156.000 Purchases made during 2018. I 109000 ② Proceeds from scle of long form Investments. - Particulars Book value in 2017 110.000 Lessi Bock value in 2018 79000 code Book value of sold Investment, 31.000 Grown on sale of such long term Trustment 5,900 Sale Proceeds from sale of Investments 130,700 - ③ Amount of Dividend paid : Particular Retained Earnings in 2018 Less! Retained Earnings in 2017 Increase in Retained kamings But Actual net income in 2018 pondend paid c® - | Amourds 219,000 132,000 87,000 98,700 11,700 @ o