Question

The 2019 accounting records of Pape Transport reveal these transactions and events.   

  

Payment of interest $64,165 Payment of salaries and wages $340,077

Cash sales 307,994 Depreciation expense - vehicles 102,665

Receipt of dividend revenue 115,498 Proceeds from sale of vehicles 5,210,237

Payment of income tax 76,999 Purchase of vehicles for cash 141,164

Profit 243,829 Loss on sale of vehicles 19,250

Payments for inventory 622,405 Payment of operating expenses 179,663

Payment for land 474,825 Retained earnings at the start of the year          507,500

Collection of accounts receivable 1,251,227 Retained earnings at the end of the year          531,100

  

Required   

a) Prepare the cash flows from operating activities section for the year ended 31 December 2019 using the direct method.   

b) How much was the payment of dividends?   

c) During the year equipment was sold, and the company recorded a  profit on sale of equipment in the income statement of $5,100.   

This equipment cost $49,500  originally and had a carrying amount of $15,400 at the time of sale.

What were the proceeds from the sale of the equipment?

Answer 1

1. Cash Inflow from operating activities

S.no	Activity	Amount
1	Payment of Interest	-64165
2	Receipt of dividends	115498
3	Payment of Salaries and Wages	-340077
4	Cash Sales	307994
5	Payment of Income tax	-76999
6	Payment for Inventory	-622405
7	Payment for Operating expenses	-179663
8	Collection from accounts receivables	1251227
Cash Inflow from operating activities	391410

2. Dividend paid during the year

Activity	Amount
Retained earning at the begnning of year(A)	507500
Payment of Interest	-64165
Receipt of dividends	115498
Depreciation	-102665
Profit of current year	243829
Loss on sale of vehicles	-19250
Payment of Salaries and Wages	-340077
Cash Sales	307994
Payment of Income tax	-76999
Payment for Inventory	-622405
Payment for Operating expenses	-179663
Total(B)	-230403
Retained earning at the end of year(C)	531100
Dividend Paid (A+B-C)	254003

3. Sale proceeds is 20500 i.e. 15400+5100