An extract of the income statement and the statement of financial position for B
ID: 2561203 • Letter: A
Question
An extract of the income statement and the statement of financial position for BK Engineering Pte Ltd are given as follows: BK Engineering Pte Ltd Income Statement (extract) For the year ended 31st December 20X2 Sales revenue Cost of goods sold Gross Profit Interest revenue Loss on sale of fixed assets 325,000 98,500 226,500 1,800 (2.000 226,300 Total revenue and loss Depreciation expense Other operating expense Total expense 10,400 89,000 Profit before tax Income tax expense Profit after tax 99.400 126,900 5,500 121.400Explanation / Answer
Solution:
BK Engineering Pte Ltd.
Cash Flow Statement (Indirect Method)
Cash Flow from Operating Activities:
$$
Net Profit before tax and extraordinary items
$126,900
Adjustments for:
+
Depreciation Expenses (Non cash item)
$10,400
+
Loss on Sale of fixed assets (Investing Activity)
$2,000
-
Interest Revenue (Investing Activity)
-$1,800
Operating Profit before working capital changes:
$137,500
Adjustment for:
-
Accounts Receivable (22300 - 15500)
-$6,800
+
Inventories (10500 - 6100)
$4,400
+
Prepaid Expenses (7000 - 2300)
$4,700
-
Accounts Payable (11500 - 9700)
-$1,800
+
Salary Payable (9000 - 6600)
$2,400
+
Utilities Payable (8800 - 7200)
$1,600
Cash generation from operations
$142,000
-
Direct taxes
-$5,500
Net Cash generated from Operative Activities
$136,500
Cash Flow from Investing Activities:
-
Purchase of Fixed Assets (1000000 - 660000)
-$340,000
+
Sale of Equipment (Note 1)
$7,600
+
Interest received
$1,800
Net Cash from Investing Activities
-$330,600
Cash Flow from Financing Activities:
+
Proceeds from long term borrowings (290000 - 40000)
$250,000
-
Dividend Paid (Difference of Retained Earnings 24400 + CY Profit 121,400 - 97,500)
-$48,300
Net Cash from Investing Activities
$201,700
Net Increase/(Decrease) in Cash and Cash Equivalents
$7,600
Cash and Cash Equivalents at the beginning of the year
$16,700
Cash and Cash Equivalents at the end of the year
$24,300
Note 1: Sales of Equipment
Beginning Balance
$80,000
Less: Depreciation for Current Year
-$10,400
Less: Loss on Sale of Equipment
-$2,000
$67,600
Less: Ending Balance
-$60,000
Sale of Equipment
$7,600
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BK Engineering Pte Ltd.
Cash Flow Statement (Indirect Method)
Cash Flow from Operating Activities:
$$
Net Profit before tax and extraordinary items
$126,900
Adjustments for:
+
Depreciation Expenses (Non cash item)
$10,400
+
Loss on Sale of fixed assets (Investing Activity)
$2,000
-
Interest Revenue (Investing Activity)
-$1,800
Operating Profit before working capital changes:
$137,500
Adjustment for:
-
Accounts Receivable (22300 - 15500)
-$6,800
+
Inventories (10500 - 6100)
$4,400
+
Prepaid Expenses (7000 - 2300)
$4,700
-
Accounts Payable (11500 - 9700)
-$1,800
+
Salary Payable (9000 - 6600)
$2,400
+
Utilities Payable (8800 - 7200)
$1,600
Cash generation from operations
$142,000
-
Direct taxes
-$5,500
Net Cash generated from Operative Activities
$136,500
Cash Flow from Investing Activities:
-
Purchase of Fixed Assets (1000000 - 660000)
-$340,000
+
Sale of Equipment (Note 1)
$7,600
+
Interest received
$1,800
Net Cash from Investing Activities
-$330,600
Cash Flow from Financing Activities:
+
Proceeds from long term borrowings (290000 - 40000)
$250,000
-
Dividend Paid (Difference of Retained Earnings 24400 + CY Profit 121,400 - 97,500)
-$48,300
Net Cash from Investing Activities
$201,700
Net Increase/(Decrease) in Cash and Cash Equivalents
$7,600
Cash and Cash Equivalents at the beginning of the year
$16,700
Cash and Cash Equivalents at the end of the year
$24,300
Note 1: Sales of Equipment
Beginning Balance
$80,000
Less: Depreciation for Current Year
-$10,400
Less: Loss on Sale of Equipment
-$2,000
$67,600
Less: Ending Balance
-$60,000
Sale of Equipment
$7,600
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