The income statement and comparative Statement of Financial Positions of MacTavish Ltd. are shown below. Income Statement for the year ended December 31, 20x4 Sales $ 1,420,000 Cost of goods sold (1,110,000) Depreciation expense (55,000) Interest expense (22,000) Operating expenses (178,000) Gain on sale of capital assets 10,000 Income tax expense (19,000) Net income $ 46,000 Statement of Financial Position as at December 31 20x4 20x4 20x3 Cash $ 71,000 $ 80,000 Accounts receivable 191,000 169,000 Inventory 303,000 324,000 Prepaid expenses 18,000 26,000 Capital assets 640,000 612,000 Accumulated depreciation (301,000) (253,000) $922,000 $958,000 Accounts payable $ 149,000 $ 243,400 Interest payable 41,000 36,000 Income taxes payable 8,000 12,000 Deferred revenue 25,000 17,000 Bonds payable – net 226,000 229,600 Common shares 317,000 300,000 Retained earnings 156,000 120,000 $922,000 $958,000 Additional information 1. The bonds payable have a face value of $200,000 and are repayable on December 31, 20x9. 2. Cash dividends were declared on October 15, 20x4 and paid on November 30, 20x4. 3. Capital assets that were 70% depreciated were disposed during the year. 4. The company's policy is to treat cash paid out for interest as cash flow from operations and dividends paid as cash flow from financing. Required I. Prepare the ‘Cash flow from operations’ portion of the Statement of Cash Flow for the year ended December 31, 20x4. Use the direct approach. II. What are the proceeds received on the sale of capital assets?
The income statement and comparative
Income Statement for the year ended December 31, 20x4
Sales $ 1,420,000
Cost of goods sold (1,110,000)
Depreciation expense (55,000)
Interest expense (22,000)
Operating expenses (178,000)
Gain on sale of capital assets 10,000
Income tax expense (19,000)
Net income $ 46,000
Statement of Financial Position as at December 31 20x4
20x4 20x3
Cash $ 71,000 $ 80,000
Inventory 303,000 324,000
Prepaid expenses 18,000 26,000
Capital assets 640,000 612,000
$922,000 $958,000
Accounts payable $ 149,000 $ 243,400
Interest payable 41,000 36,000
Income taxes payable 8,000 12,000
Deferred revenue 25,000 17,000
Bonds payable – net 226,000 229,600
Common shares 317,000 300,000
$922,000 $958,000
Additional information
1. The bonds payable have a face value of $200,000 and are repayable on December 31, 20x9.
2. Cash dividends were declared on October 15, 20x4 and paid on November 30, 20x4.
3. Capital assets that were 70%
4. The company's policy is to treat cash paid out for interest as
paid as cash flow from financing.
Required
I. Prepare the ‘Cash flow from operations’ portion of the Statement of Cash Flow for the year ended
December 31, 20x4. Use the direct approach.
II. What are the proceeds received on the sale of capital assets?
Step by step
Solved in 4 steps with 4 images
