Question

Exercise 22-15 (c) (indirect method) Bramble 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 Bramble as of May 31, 2017, are as follows: BRAMBLE INC. Statement of Financial Position As at May 31 Current assets 2017 2016 Cash $34,840 $20,170 Accounts receivable 77,490 56,290 Inventory 188,310 199,460 Prepaid expenses 8,900 7,790     Total current assets 309,540 283,710 Plant assets 596,500 505,500 Less: Accumulated depreciation 150,170 122,170 Net plant assets 446,330 383,330     Total assets $755,870 $667,040 Current liabilities Accounts payable $119,690 $115,690 Salaries and wages payable 60,940 72,790 Interest payable 26,130 23,060     Total current liabilities 206,760 211,540 Mortgage payable 78,000 104,000     Total liabilities 284,760 315,540 Shareholders’ equity Common shares 336,750 280,000 Retained earnings 134,360 71,500     Total shareholders’ equity 471,110 351,500     Total liabilities and shareholders’ equity $755,870 $667,040 BRAMBLE INC. Income Statement For the Year Ended May 31, 2017 Sales $ 1,322,150 Cost of goods sold 803,000 Gross margin 519,150 Expenses Salaries and wages expense 193,000 Interest expense 66,400 Other operating expenses 24,600 Depreciation expense 28,000 Total operating expenses 312,000 Operating income 207,150 Income tax expense 65,600 Net earnings $ 141,550 The following is additional information about transactions during the year ended May 31, 2017 for Bramble Inc., which follows IFRS. 1. Plant assets costing $91,000 were purchased by paying $53,000 in cash and issuing 5,000 common shares. 2. The “other expenses” relate to prepaid items. 3. In order to supplement its cash, Bramble issued 4,000 additional common shares. 4. There were no penalties assessed for the repayment of mortgage. 5. Cash dividends of $78,690 were declared and paid at the end of the fiscal year. Using the indirect method, calculate only the net cash flow from operating activities for Bramble Inc. for the year ended May 31, 2017. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

A Cash flow statement provides the following information:

1) Information about company's cash receipt and cash payment during an accounting period.

2) Information about company's operating, investing and financing activities.

3) Information access the company's liquidity, solvency and financing flexibility.

Cash flow from operating activities (CFO), consists of the inflows and outflows of cash resulting from transactions that affect a firm's net income.

Cash flow from investing activities (CFI) consists of the inflow and outflows of cash resulting from the acquisition of long term assets and investment.

Cash Flow from financing activities (CFF) consists of the inflow and outflows of cash resulting from transactions affecting a firm's capital structure.