Question

Question 6 The following are selected statement of financial position accounts of Concord Ltd. at December 31, 2019 and 2020, and the increases or decreases in each account from 2019 to 2020. Also presented is the selected income statement and other information for the year ended December 31, 2020. Statement of Financial Position (selected accounts) Assets 2020 2019 Increase (Decrease) Accounts receivable $84,600 $73,400 $11,200 FV-NI investments 39,750 49,800 (10,050 ) Property, plant, and equipment 180,200 148,100 32,100 Accumulated depreciation (81,800 ) (67,900 ) 13,900 Liabilities and shareholders’ equity Bonds payable 151,300 146,900 4,400 Dividends payable 7,400 5,150 2,250 Common shares 31,300 21,800 9,500 Retained earnings 107,400 91,550 15,850 Income Statement (selected information) For the Year Ended December 31, 2020 Sales revenue $314,000 Depreciation expense 34,000 Gain on disposal of FV-NI investments 4,800 Unrealized loss on FV-NI investments 3,800 Gain on disposal of equipment 14,600 Net income 31,500 Additional information: 1. During 2020, equipment costing $44,300 was sold for cash. 2. Accounts receivable relate to sale of inventory. 3. During 2020, $20,400 of bonds payable were issued in exchange for property, plant, and equipment. All bonds were issued at par. 4. During the year, short-term investments accounted for at FV-NI with a carrying amount of $18,050 were sold. Additional investments were purchased. Determine the category (operating, investing, or financing) and the amount that should be reported in the statement of cash flows for the following items, assuming Concord Ltd. follows IFRS and has chosen to report cash dividends received and paid as operating activities and interest received and paid as operating activities. 1.Cash received from customers amount? 2.Payments for purchases of property, plant, and equipment. amount? 3.Proceeds from the sale of equipment. amount? 4.Cash dividends paid.amount? 5.Redemption of bonds payable. amount? 6.Proceeds from the sale of FV-NI investments. amount? 7.Purchase of FV-NI investments. amount?

Answer 1

Answer :

Items Treatment Amount

1.Cash received from customers amount Operating Activity $302,800

2.Payments for purchases of property, plant, and equipment. amount Investing activity $61,500

3.Proceeds from the sale of equipment. amount Investing activity   $44,300

4.Cash dividends paid amount Operating Activity $2,250

5.Redemption of bonds payable amount Financing activity   $16,000

6.Proceeds from the sale of FV-NI investments. amount Investing activity   $18,050

7.Purchase of FV-NI investments. amount   Investing activity $3,200

Working Notes :

1. Cash Receipts from Customers

= Net Sales - Increase in Accounts receivable

= $314,000 - $11,200

= $302,800

2. Payments for purchases of property, plant, and equipment. amount

= Beginning PPE + Gain on sale of equipment - Depreciation - Sale of equipment - Ending PPE - Exchange of Bonds

= $80,200 + $14,600 - $34,000 - $44,300 - $98,400 - $20,400

= $61,500

3. Redemption of bonds payable amount

= Issue in exchange - Increase in bonds payable

= $20,400 - $4,400

= $16,000

4. Purchase of FV-NI investments. amount

= Decrease in investment + Gain on disposal - Sale of investment

= $10,050 + $4,800 - $18,050

= -$3,200