Statement of cashflows-Indirect method | |||||
$ | $ | ||||
Cashflow from operating activities: | |||||
Net income | 92780 | ||||
Adjustments to reconcile net income to | |||||
net cash provided by operating activities: | |||||
Depreciation expense | 58700 | ||||
Gain on sale of investment in land | -5000 | ||||
Gain on sale of equipment | -8890 | ||||
Increase in accounts receivable | (91600-37500) | -54100 | |||
Increase in inventory | (127800-107650) | -20150 | |||
Increase in accounts payable | (53700-48780) | 4920 | |||
Decrease in accrued liabilities | (19430-12500) | -6930 | -31450 | ||
Net cash provided by operating activities (A) | 61330 | ||||
Cashflow from financing activities: | |||||
Issue of notes | (138000-75000) | 63000 | |||
Payment of dividend | (Note:3) | -36770 | |||
Net cash provided by financing activities (B) | 26230 | ||||
Cashflow from investing activities: | |||||
Sale of investment in land | (Note:1) | 27700 | |||
Equipment sold | 15290 | ||||
Equipment purchased for cash | (Note:2) | -107100 | |||
Net cash provided by investing activities (C) | -64110 | ||||
Net increase in cash | (A)+(B)+© | 23450 | |||
Add: beginning balance of cash | 47850 | ||||
Ending balance of cash | 71300 | ||||
Note:1 -Sale value of investment sold | |||||
Analyze investment in land | |||||
$ | |||||
Beg bal. | 110000 | ||||
Less: End bal. | 87300 | ||||
22700 | |||||
Add: Gain on sale | 5000 | ||||
Sale value of investment | 27700 | ||||
Note:2- Equipment purchased for cash | |||||
Analyze property, plant and equipment account | |||||
$ | $ | ||||
Ending balance | 291000 | ||||
Add: Cost of equipment sold | 56100 | ||||
347100 | |||||
Less: | |||||
Beg bal | 213000 | ||||
Equipment purchased for common shares | |||||
(Increase in common shares) | (230000-203000) | 27000 | 240000 | ||
Purchased for cash | 107100 | ||||
Note:3- Dividend paid | |||||
Analyze retained earnings account | |||||
$ | |||||
Beg bal | 129790 | ||||
Add: Net income | 92780 | ||||
222570 | |||||
Less: End bal. | 185800 | ||||
Dividend paid | 36770 | ||||
General notes: | |||||
Depreciation is a non cash.Hence added back to net income | |||||
Gain on sale of investment and equipment is a non-recurring item. Hence to deducted from net income. | |||||
Increase in current assets results in cash outflow.Hence, deducted. | |||||
Increase in current liability results in cash inflow. Hence, addded. | |||||
Decrease in current liability results in cash outflow. Hence, deducted. | |||||
Non-cash investing and financing activities: | |||||
$ | |||||
Equipment purchased for common shares | (Note:2) | 27000 | |||
Non-cash investing and financing activities | 27000 |
Information from the statement of financial position and statement of income are given below for Blue...
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