Question

Glen’s Grocery store

                                             Balance Sheet as at 31st December 2018

Current Assets                       $              $ Current Liabilities                  $              $           

Bank                                      3,554                                                 

Accounts Receivable             8,529          Accounts Payable                               10,490

Inventory                              15,637

Prepaid expenses                 2,132      29,852    

                                                                               Non Current Liabilities

                                                                                                                                        0              

Non Current Assets                                                                                           

Equipment                          49,755                       Owners’ Equity

Accumulated Depreciation (14,215)   

                                                            35,540      Capital                                                  54,902                                                                                               

Total Assets                                   $ 65,392      Total Liabilities & Owners’ Equity $ 65,392

Income Statement for the year ended 31^st December 2019

Sales                                                                                     180,000

Cost of Goods Sold                                                                                      136,456

Gross profit                                                                43,544

Other expenses (inc depreciation)         24,880

Tax expense                                         3,000

Interest expense                                                                  1,654         

                                                                                 29.534                                                                            

                                                                                   14,010

+ Interest earned and received                                    2,340                      

Net Profit after tax                                                                              $16,350

                                                           

                                                                     Glen’s Grocery Store

                                                 Balance sheet as at 31st December 2019

Current assets Bank                                    4,835 Accounts receivable          11 372 Inventory                            22 034 Prepaid Expenses               1,421   39,662 Non- current assets Equipment                          63,972 Less accum depreciation (18,480)   45,492 Total assets                                   $85,154

Current liabilities Accounts payable                                 7,108 Non- current liabilities Loan                                                      12,794 Total liabilities                                       19,902 Owners’ equity Capital                  47,752 Plus profit             17 500 Total owner’s equity                             65,252 Total liabilities and owners’ equity $85,154

Additional Information

Drawings of $6000 were paid during the year.

Equipment was purchased for cash.

Required:

Prepare a properly classified Cash Flow Statement for the year ended 31 December 2019 from the above information showing all your workings.

Answer 1

Cash flow for 2019 for Glen is shown below
Glen's Grocery store
Statement of cash flows
For the current year
Cash flows from operating activities
Net income	$16,350
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense	$4,265		(18480-14215)
Increase in accounts receivable	-$2,843		8529-11372
Increase in inventory	-$6,397		15637-22034
Decrease in prepaid expenses	$711		2132-1421
Decrease in accounts payable	-$3,382		7108-10490
Net cash provided by operating activities	$8,704
Cash flows from investing activities
Purchase of equipment	-$14,217		(49755-63972)
Net cash used by investing activities	-$14,217
Cash flows from financing activities
Loan obtained	$12,794
Dividend paid	-$6,000
Net cash provided by financing activities	$6,794
Net increase in cash	$1,281
Cash balance, December 31, prior year	$3,554
Cash balance, December 31, current year	$4,835