Question

IFRS 23-7 Bridgeport Corporation has contracted with you to prepare a statement of cash flows. The controller has provided the following information. December 31 2017 2016 Buildings $ –0– $29,850 Equipment 50,500 25,500 Patents 5,440 6,800 Investments –0– 3,550 Inventory 11,050 9,100 Accounts receivable 12,800 10,100 Cash 32,435 14,100 $ 112,225 $99,000 Share capital—ordinary $ 44,100 $34,100 Retained earnings 21,300 7,100 Allowance for doubtful accounts 3,550 5,600 Accumulated depreciation on equipment 2,550 5,600 Accumulated depreciation on buildings –0– 7,100 Accounts payable 6,075 3,550 Dividends payable –0– 5,550 Long-term notes payable 31,100 25,850 Notes payable, short-term (non-trade) 3,550 4,550 $ 112,225 $99,000 Additional data related to 2017 are as follows. 1. Equipment that had cost $12,100 and was 40% depreciated at time of disposal was sold for $3,050. 2. $10,000 of the long-term notes payable was paid by issuing ordinary shares. 3. Cash dividends paid were $5,550. 4. On January 1, 2017, the building was completely destroyed by a flood. Insurance proceeds on the building were $32,100. 5. Equity investments (non-trading) were sold at $2,250 above their cost. 6. Cash was paid for the acquisition of equipment. 7. A long-term note for $15,250 was issued for the acquisition of equipment. 8. Interest of $2,550 and income taxes of $8,100 were paid in cash. Prepare a statement of cash flows using the indirect method

Answer 1

Statement of Cash Flows - Indirect Approach
	Amount in $	Amount in $
Net Cash flows from operating activities
Net income		$           14,200
Adjustments for reconcile the net income to:
Depreciation Expenses	$                 1,790
Gain on sale of investment	$               -2,250
Loss on sale of Equipment	$                 4,210
Gain on proceeds from insurance	$               -9,350
Amortization of patent	$                 1,360
Account receivable Increases	$               -2,700
Inventory Increases	$               -1,950
Account payable increases	$                 2,525
Allowance for doubtfull debt decreases	$               -2,050
		$           -8,415
Net cash from operating activities		$             5,785
Cash flows from investing activities
Sale of Equipment	$                 3,050
Amount received from insurance for building	$              32,100
Sale of investment	$                 5,800
Purhcase of Equipment	$             -21,850
Net cash used in investing activities		$           19,100
Cash flows from Financing activities
Cash paid for short term note payable	$               -1,000
Payment of Dividednds	$               -5,550
Net cash used in financing activities		$           -6,550
Net increase in cash and cash equivalents		$           18,335
Add :Cash and cash equivalents at beginning of period		$      14,100
Cash and cash equivalents at end of period		$           32,435
Calculation of Net Income
Ending balance of retained earnings	$              21,300
Less:Beginning balance of retaiend Earnings	$                 7,100
Balance is net income	$              14,200
Caclualtion of Purchae of Equipment
Beginning balance	$              25,500
Less: Sale of Equipment	$              12,100
Net Balance(A)	$              13,400
Less : Ending balance of Eqipment(B)	$              50,500
Difference in purchase of Equipment (B-A)	$              37,100
Less: purchase for non cash / long term note payable	$              15,250
Equipment purchase in cash	$              21,850