Exercise 22-15 (b) (direct method) Flounder Inc., a major retailer of bicycles a
ID: 2512025 • Letter: E
Question
Exercise 22-15 (b) (direct method)
Flounder Inc., a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative statement of financial position and income statement for Flounder as of May 31, 2017, are as follows:
The following is additional information about transactions during the year ended May 31, 2017 for Flounder Inc., which follows IFRS.
Prepare a statement of cash flows for Flounder Inc. for the year ended May 31, 2017, using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
Statement of Financial Position
As at May 31 Current assets 2017 2016 Cash $34,830 $20,850 Accounts receivable 81,800 56,600 Inventory 188,760 200,000 Prepaid expenses 9,110 7,820 Total current assets 314,500 285,270 Plant assets 598,500 507,500 Less: Accumulated depreciation 154,850 122,850 Net plant assets 443,650 384,650 Total assets $758,150 $669,920 Current liabilities Accounts payable $120,000 $116,000 Salaries and wages payable 60,880 72,820 Interest payable 26,060 23,600 Total current liabilities 206,940 212,420 Mortgage payable 80,830 106,000 Total liabilities 287,770 318,420 Shareholders’ equity Common shares 335,920 280,000 Retained earnings 134,460 71,500 Total shareholders’ equity 470,380 351,500 Total liabilities and shareholders’ equity $758,150 $669,920
Explanation / Answer
FLOUNDER INC. Statement of cash flows (direct method) For the year ended December31, 2017 Cash flow from operations Cash collections from sales * 1315070 Cash payment for cost of goods ** -792760 Salaries and wages paid *** -214940 Other operating expenses **** -24890 Cash flow from operations 282480 Cash flow from investing activities Purchase of plant assets -54000 Cash flow from financing activities Repayment of mortgage loan -25170 issue of common shares 18920 Dividend paid -78510 Interest paid ***** -63340 Cash flow from financing activities -148100 income tax paid -66400 Net Cash flow 13980 Beginning Cash balance 20850 Ending cash balance 34830 Adition to cash balance 13980 Collections from sales Beginning Balance of receivables 56600 Add: Sales during the year 1340270 Total 1396870 Less: Ending Balance of receivables 81800 Cash collection from sale * 1315070 Accounts Payable Cost of goods sold 808000 Add: Ending inventory 188760 996760 Less: beginning inventory 200000 Cost incured during the year 796760 Add: beginning accounts payable 116000 Total 912760 Less: ending accounts payable 120000 Cash paid for cost of goods sold ** 792760 Salaries and wages Salaries and wages expense 203000 Add: Beginning salaries and wages payable 72820 275820 Less: Ending salaries and wages payable 60880 Cash paid for salaries and wages *** 214940 Other operating expenses Operating expenses for the year 23600 Add: Ending balance of prepaid expenses 9110 32710 Less: Beginning balance of prepaid expenses 7820 Cash paid for other operating expenses **** 24890 Interest expense Interest expense for the year 65800 Add: Beginning balance of interest payable 23600 89400 Les: Ending balance of interest payable 26060 Cash paid for iterest expense ***** 63340
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