Question

Today is December 31, 2018. Today, we started the Hilo Tourism Company. To start the business, the owners have invested $25,000 into the business from their own pocket. In addition, the company borrowed $15,000 at a 10 percent simple interest rate. Thus, the company has $40,000 to work with. The company will use $10,000 of this money for operating cash. The company will use the remaining money to purchase a tourism van for $30,000 on December 31st. The company will pay interest only on the loan. The Hilo Tourism Company will contract our services to Royal Cruise Line who has agreed to pay us $160,000 in the year 2019 for providing tours to high-class customers from the Hilo dock to the Volcano. All sales are cash sales. Hilo Tourism Company will have the following expenses in the year 2019. The van will wear out by $5,000 per year. Insurance will cost $12,000 per year. It will cost $20,000 per year for the driver and $16,000 per year for the tour guide. Fuel and repairs combined will cost $40,000 per year. All operating expenses, except depreciation, are cash operating expenses. The company is in a 10 percent tax bracket. One half of the firm’s 2019 net income will be paid out to the owners as a dividend and the other half of the firm’s net income will be retained within the firm. Create a Statement of Cash Flows for the year ending, December 31, 2019. CREATE ONLY A STATEMENT OF CASH FLOWS TO ANSWER THIS QUESTION. I WILL ASK YOU TO PRODUCE ADDITIONAL STATEMENTS IN OTHER QUESTIONS

Answer 1

Hilo Tourism Company
Particulars	Amt $
Opening Cash balance jan 1, 2019	40,000
Invested in Van	30,000
Bank Loan amount	15,000
Annual Interest @10%	1,500
Revenue in 2019	160,000
Depreciation expense-2019	5,000
Insurance expense	12,000
Wages Expense	36,000
Fuel & Repairs	40,000
Tax Rate	10%
Dividend payout ratio=	50%

Proforma Income Statement:
for the year 2019
Service Revenue	160,000
Operating Expenses
Depreciation expense	5,000
Insurance expense	12,000
Wages Expense	36,000
Fuel & Repairs	40,000
Total Operating Expenses	93,000
EBIT	67,000
Interest Expense	1,500
EBT	65,500
Tax @10%	6,550
Income After Tax	58,950
Dividend pay out @5%	29,475
Transferred to Retrained Earning	29,475

	Hilo Tourism Company
	Statement of Cash flow
	for the Year ending Dec31,2019
	Details	Amt $
	Net Income after Tax	58,950
	Add: Non Cash Depreciation expense	5,000
a	Total Cash flow from Operating Avtivities	63,950
	Investing Activities
	Cash payment for investment in Van	(30,000)
b	Net Cash flow from Investing Activities	(30,000)
	Financing Activities
	Dividend Payment	(29,475)
c	Net Cash flow from Financing Activities	(29,475)
d	Total Cash flow from Operating, Investing & Financing Activities=a+b+c	4,475
e	Opening Balance Cash : Jan 1 2019	40,000
f	Closing Balance Cash : Dec 31,2019=e+d=	44,475