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    Chapter 13 (4) Additional Question

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    Jason Bickert
    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.

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    Chapter 13 (4) Additional Question

    Uploaded by

    Jason Bickert
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    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.

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    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.

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    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    126 views2 pages

    Chapter 13 (4) Additional Question

    Uploaded by

    Jason Bickert
    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.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 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

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