Exercise 13-8 The comparative statement of financial position for Charmaine Reta

Question

Exercise 13-8 The comparative statement of financial position for Charmaine Retailers Ltd. follows CHARMAINE RETAILERS LTD. Statement of Financial Position December 31 Assets Cash Accounts receivable Merchandise inventory Furniture Accumulated depreciation Total assets 2014 42,420 80,800 2015 $.18,180 9,090 169,680 144,430 (45,450) (24,240) 50,500 164,630 $357,540 $252,500 Liabilities and Shareholders' Equity Accounts payable Bank loan payable (noncurrent) Common shares Retained earnings 45,450 35,350 76,760 55,550 147.46084,840 104,030 60,600 Total liabilities and shareholders' equity 52,500. Additional information: 1. Profit was $62,620 in 2015 2. Depreciation expense was $21,210 in 2015 3. Payments made to the bank pertaining to the bank loan were $10,100 in 2015. Some new loans were obtained that year. 4. Common shares were issued in 2015 and no shares have been bought back by the company 5. In 2015, no furniture was sold Prepare a statement of cash flows using the indirect method for 2015. (Show amounts that decrease cash flow with either a -sign e.g.-15,000 or in parenthesis e.g. 15,000) CHARMAINE RETAILERS LTD. Statement of Cash Flows-Indirect Method Year Ended December 31, 2015 Adjustments to reconcile net income to

Explanation / Answer

  

CHARMAINE RETAILERS LTD Statement of cash flows for the year ended Deecember 31,2015    Indirect method Particulars Amount($) Cash flows from operating activities Net income $62620 Depreciation $21210 Adjustments: Increase in accounts receivable ($8080) Increase in inventory ($25250) Increase in accounts payable $10100 Net cash provided by operating activities $60600 Cash flows from investing activities Purchase of furniture ($83830) Net cash flow used by investing activities ($23230) Cash flows from financing activities Issue of bank loan $27270 Issue of common shares $5050 Net cash flow provided by financing activities $9090 Opening cash balance $9090 Ending cash balance $18180.

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