PSB11.4 Here are the financial statements of Kiwi Ltd. KIWI LTD Statement of fin

Question

PSB11.4 Here are the financial statements of Kiwi Ltd.

KIWI LTD
Statement of financial position
as at 31 December 2015

KIWI LTD
Statement of profit or loss
for the year ended 31 December 2015

Additional information:

Dividends were declared and paid.

During the year equipment was sold for $13 000 cash. This equipment cost $19 500 originally and had a book value of $13 000 at the time of sale.

All depreciation expense, $10 400, is in the selling expense category.

All sales and purchases are on account.

Additional equipment was purchased for cash.

Accounts payable pertains to merchandise creditors.

All operating expenses except for depreciation are paid in cash.

Required

Prepare a reconciliation between profit and cash provided by operating activities.
(Note: This is also the indirect method of calculating operating activity cash flows.)

2015 2014 Assets Cash $33 800 $42 900 Accounts receivable 36 400 18 200 Inventory 49 400 32 500 Property, plant, and equipment $91 000 $101 400 Less: Accumulated depreciation   (35 100)   55 900   (31 200)   70 200 Total $175 500 $163 800 Liabilities and equity Accounts payable $40 300 $55 900 Income tax payable 33 800 26 000 Bonds payable 26 000 13 000 Contributed equity 32 500 32 500 Retained earnings   42 900   36 400 Total $175 500 $163 800

Explanation / Answer

Solution:

Statement of Cash Flows (Partial) - KIWI Ltd
For the year ended December 31, 2015 Particulars Details Amount Cash Flow from Operating Activities: Net Income $53,300.00 Adjustments to reconcile net income to cash flow from operating activities: Depreciation $10,400.00 Increase in Accounts Receivables ($36400 - $18200) -$18,200.00 Increase in Inventory ($49400 - $32500) -$16,900.00 Decrease in Accounts payable ($55900 - $40300) -$15,600.00 Increase in Income tax payable ($33,800 - $26,000) $7,800.00 Total Adjustments -$32,500.00 Net Cash Flow From Operating Activites (A) $20,800.00

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