Location via proxy:   [ UP ]  
[Report a bug]   [Manage cookies]                
Scribd
Upload
156 views

Chapter 13 (4) Additional Question

The financial statements provide income statement, balance sheet, and additional information for Chen Company Ltd. for years ending 2010 and 2009. A cash flow statement is prepared for 2010 using the indirect method. It shows that cash increased by $6,000 in 2010, with $66,000 provided by operating activities and $58,000 used in investing activities including the purchase and sale of capital assets. Financing activities used $2,000, with $50,000 from common share issuance offsetting other financing outflows.

Uploaded by

Jason Bickert
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
156 views

Chapter 13 (4) Additional Question

The financial statements provide income statement, balance sheet, and additional information for Chen Company Ltd. for years ending 2010 and 2009. A cash flow statement is prepared for 2010 using the indirect method. It shows that cash increased by $6,000 in 2010, with $66,000 provided by operating activities and $58,000 used in investing activities including the purchase and sale of capital assets. Financing activities used $2,000, with $50,000 from common share issuance offsetting other financing outflows.

Uploaded by

Jason Bickert
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 2

Chapter 13(4) Additional Question

Question 4

The comparative financial statements of Chen Company Ltd. for the years ending
December 31 are shown below:

2010 2009

Sales $ 1,280,000
Cost of goods sold (780,000)
Gross profit 500,000

Gain on disposal of capital assets 1 4,000


Amortization expense (49,000)
Operating expenses (336,000)
Income tax expense (49,000)
Net income $ 70,000

Cash $ 111,000 $ 105,000


Accounts receivable 83,000 88,000
Inventory 255,000 219,000
Long-term investments 75,000 63,000
Capital assets 1 910,000 880,000
Accumulated amortization (284,000) (255,000)
$ 1,150,000 $ 1,100,000

Accounts payable $ 133,000 $ 144,000


Income taxes payable 21,000 28,000
Long-term debt 45,000 50,000
Preferred shares, no-par value 135,000 150,000
Common shares, no-par value 500,000 450,000
Retained earnings 316,000 278,000
$ 1,150,000 $ 1,100,000
1
During 2010, Chen sold capital assets with a net book value of $136,000 for $140,000.

Required

Prepare a cash flow statement for the year ended December 31, 2010. Use the indirect
approach to report the operating activities.
Chapter 13(4) Additional Question

Question 4

CHEN COMPANY LTD.


Cash Flow Statement
For the year ended December 31
Operating Activities
Net income $ 70,000
Non-cash items
Amortization expense 49,000
Gain capital assets (4,000)

Change in working capital items:


Accounts receivable 5,000
Inventory (36,000)
Accounts payable (11,000)
Income taxes payable (7,000) $ 66,000

Investing Activities
Purchase of long-term investments (12,000)
Purchase of capital assets (Note 1) (186,000)
Sale of capital assets 140,000 (58,000)

Financing Activities
Long-term debt (5,000)
Preferred shares (15,000)
Common shares 50,000
Dividends paid (Note 2) (32,000) (2,000)

Increase in cash 6,000


Cash — January 1, 2010 105,000
Cash — December 31, 2010 $ 111,000

Note 1:
Accumulated amortization 255,000 + 49,000 – 284,000 = 20,000
Cost of asset disposed 136,000 + 20,000 = 156,000
Purchase of capital assets 880,000 – 156,000 – 910,000 = 186,000

Note 2:
278,000 + 70,000 – 316,000

You might also like