Honeymoon Haven Ltd is due to commence preparation of the Cash Flow Statement at
ID: 2517383 • Letter: H
Question
Honeymoon Haven Ltd is due to commence preparation of the Cash Flow Statement at the end of 2010. The accountant has called in sick and the statement needs to be prepared by the end of the day. Consequently you, as managing director of the company are now required to complete this task, and have been given the following data:
Summarised Balance Sheet as at 31 December 2010
2010
2009
Cash
106,800
168,210
Accounts Receivable
138,840
133,500
Inventory
213,600
202,920
Property, plant & equipment (net)
341,760
357,780
Total Assets
801,000
862,410
Accounts Payable
128,160
144,180
Wages Payable
2,670
8,010
Mortgage Payable
186,900
229,620
Share Capital
347,100
347,100
Retained Profits
136,170
133,500
Total Liabilities and Owners’ Equity
801,000
862,410
Summarised Income Statement for the year ended 31 December 2010
2010
Sales
480,600
Cost of goods sold
373,800
Expenses (including wages but not depreciation)
53,400
Depreciation
32,040
Net Profit
21,360
Other information was provided as follows:
Land was sold at cost price of $53,400
Equipment was sold during the year at its written down value of $80,100
Dividends of $18,690 were paid during the year
Repayments totalling $42,720 were made on the mortgage payable during the year
Machinery costing $149,520 was purchased for cash
Required:
Prepare the Statement of Cash Flows using the Direct Method. (Refer to ILT report page 23 for layout)
Reconcile net profit to the net cash flow from operating activities. (Refer to ILT report page 37 for layout)
Summarised Balance Sheet as at 31 December 2010
2010
2009
Cash
106,800
168,210
Accounts Receivable
138,840
133,500
Inventory
213,600
202,920
Property, plant & equipment (net)
341,760
357,780
Total Assets
801,000
862,410
Accounts Payable
128,160
144,180
Wages Payable
2,670
8,010
Mortgage Payable
186,900
229,620
Share Capital
347,100
347,100
Retained Profits
136,170
133,500
Total Liabilities and Owners’ Equity
801,000
862,410
Explanation / Answer
Reconciliation of net income to net cash provided by operating activities:
Cash flows from operating activities Cash receipts from customers 475260 Cash paid to suppliers (389820) Cash paid to employees (58740) Cash generated from operations 26700 Net cash from operating activities 26700 Cash flows from investing activities Purchase of property, plant, and equipment (160200) Proceeds from sale of equipment 133500 Net cash used in investing activities (16020) Cash flows from financing activities Proceeds from issuance of common stock Proceeds from issuance of long-term debt Principal payments under capital lease obligation (42720) Dividends paid (18690) Net cash used in financing activities (61410) Net increase in cash and cash equivalents (61410) Cash and cash equivalents at beginning of period 168210 Cash and cash equivalents at end of period 106800Related Questions
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