Question

Additional information

Important Note: The sale of equipment (piece A) had a historical cost of $20,000 and accumulated depreciation of $10,000. It was sold for cash of $10,000.

GST is not included so ignore the GST component of transactions.

Prepare a Statement of Cash Flows for the year ended 30 June 2016 in accordance with accounting standards.

Prepare a statement reconciling cash flows from operating activities with profit.

The following are the financial statements of North Point Enterprises for the year ended 30 June 2016

North Point Enterprises Ltd

Income Statement

for year ended 30 June 16 $ $ Sales 250,000 Less Cost of Goods Sold     Inventories (1/7/15) 14,500     Purchases 135,000 149,500     Less Inventories (30/6/16) 8,000 141,500 108,500     Less Operating expenses     Advertising 12,300     Wages 28,000     Loss on sales of equipment (piece B) 2,000     Depreciation of equipment 12,000     Depreciation of Motor Vehicle 8,000 62,300 North Point Enterprises Ltd Balance Sheet 2016 2015 Current Assets $ $ $ $      Cash at Bank       55,000       21,500      Inventories         8,000       14,500      Accounts Receivable       78,700       42,300      Prepaid Advertising         3,200         1,200     144,900       79,500 Non-Current Assets      Equipment 46,500 66,500      Less Accum Depreciation 22,000       24,500 18,000       48,500      Motor Vehicles 44,000 44,000      Less Accum Depreciation 26,000       18,000 18,000       26,000 Total Non-Current Assets       42,500       74,500         TOTAL ASSET     187,400     154,000 Less Current Liabilities      Accounts Payable       34,900       57,700 Net Assets $ 152,500 $   96,300 Owner's Equity      Paid up Capital       95,300       85,300      Retained Profit       57,200       11,000     $152,500       $96,300 $46,200

Answer 1

Cash Flow Statement
Cash flows from operating activities;
Net income		$46200
Adjustments;
Depreciation of equipment	$12000
Depreciation of Motor Vehicle	$8000
Loss on sales of equipment (piece B)	$2000
Increase in accounts receivable	($36400)
Decrease in inventory	$6500
Increase in prepaid advertising	($2000)
Decrease in accounts payable	($22800)	($32700)
Net cash flows from operating activities		$13500
Cash flows from investing activities;
Sale of equipment (piece A)	$10000
Net cash flow from investing activities		$10000
Cash flows from financing activities;
Increase in paid up capital	$10000
Net cash flows from financiang activities		$10000
Net increase in cash and cash equivalents ($13500 + $10000 + $10000)		$33500
Cash and cash equivalents at beginning of period		$21500
Cash and cash equivalents at end of period		$55000