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In: Accounting

Presented here are statement of income and retained earnings and Comparative Balance Sheets for Madison Garden...

Presented here are statement of income and retained earnings and Comparative Balance Sheets for Madison Garden PTY LTD, which operates a National chain of sporting goods.

Statement of income and Retained Earnings for the year ended 31 December 2016

Net sales R48000   
Cost of goods sold R36000
Gross profit R12000
Selling , General and admin expense R6000
Operating income R6000
Interest expense 280
Income before tax 5720
Income tax expense 2280
Net income 3440
Preference Dividends 100
Income available to ordinary shareholders 3340
Ordinary dividends 500
To Retained Earnings 2840
Retained Earnings 01/01/2016 12000
Retained Earnings by the end of the year 14840
COMPARATIVE BALANCE SHEETS AS AT
DECEMBER 31 2016 2015
Cash 840 2700
Accounts Receivable 12500 9000
Inventory 8000 5500
Prepaid Insurance 100 400
Total Current Assets 21440 17600
Land 4000 4000
Buildings & Equipment 12000 9000
Accumulated Depreciation (3700) (3000)
Total Long Term Assets R12300 R10000
Total Assets R33740 R27600
Accounts payable 7300 5000
Taxes Payable 4600 4200
Notes payable 2400 1600
Current portion of Mortgage bond 200 200

Total Current Liabilities 14500 11000

Mortgage Bond 1400 1600
Total Liabilities 15900 12600
Preference Shares 1000 1000
Ordinary Shares 2000 2000
Retained Earnings 14840 12000
Total 17840 15000
R33 740 R27600

Solutions

Expert Solution

Madison Gardens Pty Ltd.
Statement of Cash Flows
For the year ended December 31, 2016
Cash Flows from Operating Activities $ $
Net Income 3,440
Adjustments to reconcile net income with net operating cash flows
Depreciation Expense 700
Interest Expense 280
Increase in Accounts Receivable (3,500)
Increase in Inventory (2,500)
Decrease in Prepaid Insurance 300
Increase in Accounts Payable 2,300
Increase in Taxes Payable 400
Increase in Notes Payable 800 (1,220)
Net cash flows from Operating Activities 2,220
Cash Flows from Investing Activities
Cash paid to acquire Buildings and Equipment (3,000)
Net cash used in Investing Activities (3,000)
Cash Flows from Financing Activities
Mortgage bond repaid (200)
Interest paid (280)
Preference dividends paid (100)
Ordinary dividends paid (500) (1,080)
Net decrease in cash (1,860)
Beginning cash balance 2,700
Ending cash balance 840

Note: you have not mentioned in the question what is to be calculated. Based on the type of question, i have provided cash flow statement. If more is required, please comment below.


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