Question

Lesedi Company (Pty) Ltd.’s balance sheets for the last two years are provided below

Balance Sheet	2019	2018
Cash	R 82 000	R 40 000
Accounts Receivable	180 000	150 000
Inventory	170 000	200 000
Equipment	200 000	140 000
Accum. Depreciation	(72 000)	(60 000)
Total Assets	R560 000	R470 000

Accounts Payable	R100 000	R 80 000
Long-term Payables	100 000	50 000
Ordinary Shares	250 000	250 000

Retained Earnings 110 000     90 000 Total Liabilities &      Shareholders’ Equity R560 000 R470 000

The company’s income statement for 2019 is provided below:

Income Statement 2019 Sales R345 000 Expenses: Cost of Goods Sold R120 000              Operating Expenses 58 000 Depreciation Expense 20 000 Interest Expense 2 000    200 000 Operating Income 145 000 Gain on Sale-- Equipment* 5 000 Income before Taxes 150 000 Tax Expense     30 000 Net Income/profit R120 000

*The company sold equipment for R57 000 that had a cost of R60 000

Required:

Prepare the company’s Statement of Cash flow for 2019. Use the direct method for calculating the cash flows from operating activities.                                            (15)

Answer 1