Prepare a statement of cash flows for Bicycle Thief Inc. for the year ended May 31, 1)2018, using the direct method. Support the statement with appropriate calculations, and provide all required disclosures. 2) Using the indirect method, calculate only the net cash flow from operating activities for Bicycle Thief for the year ended May 31, 2018. 3) Assume that you are a shareholder of Bicycle Thief Inc. What do you think of the dividend payout ratio that is highlighted in the statement of cash flows?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Bicycle Thief Inc., a major retailer of bicycles and accessories, operates several stores and is a
publicly traded company. The company is currently preparing its statement of cash flows. The
comparative statement of financial position and income statement for Bicycle Thief as at May
31, 2018 are as follows:

The following is additional information about transactions during the year ended May 31,
2018 for Bicycle Thief Inc., which follows IFRS:
a) Plant assets costing $95,000 were purchased by paying $44,000 in cash and issuing
5,000 common shares.
b) The “other expenses” relate to prepaid items.
c) In order to supplement its cash, Bicycle Thief issued 4,000 additional common shares.
d) There were no penalties assessed for the repayment of mortgage.
e) Cash dividends of $78,000 were declared and paid at the end of the fiscal year.

Required 

Prepare a statement of cash flows for Bicycle Thief Inc. for the year ended May 31,
1)2018, using the direct method. Support the statement with appropriate calculations,
and provide all required disclosures.
2) Using the indirect method, calculate only the net cash flow from operating activities
for Bicycle Thief for the year ended May 31, 2018.
3) Assume that you are a shareholder of Bicycle Thief Inc. What do you think of the
dividend payout ratio that is highlighted in the statement of cash flows?

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