Question

Selected accounts from the SFP of Gentron Ltd. at 31 December 20X5 and 20X4 are presented below. Gentron declared $100,000 of cash dividends during the year, and purchased $200,000 of machinery in direct exchange for common shares.

 

Required:
List the items that would be included in the SCF from these accounts for 20X5. Include the appropriate section (operating, investing, or financing). Use the indirect method of presentation in the operating activities section. List the non-cash item disclosure. Make logical assumptions about unexplained changes in accounts.

Answer 1

Operating activities – net earnings

 ($780,000 - $100,000 = $680,000 versus $940,000)......................................    $ 260,000

 

Financing activities – issued preferred shares...................................................   200,000

 

Financing activities - issued common shares 

 ($630,000 + $200,000 = $830,000 versus $900,000).....................................         70,000

 

Financing activities - cash paid for dividends...................................................   (100,000)

 

Disclosure note: non-cash transaction: common shares for machinery = $200,000

Disclosure note: non-cash transaction: common shares for machinery = $200,000