You can answer the first question, but any help beyond that would be greatly app

Question

You can answer the first question, but any help beyond that would be greatly appreciated...

The following information is background information only to be used for questions O saur. Carl's Cupcakes bakes and sells gourmet cupcakes from their retail bakery located in a busy shopping centre in suburban Brisbane. Carl's Cupcakes has been operating successfully since January 2010 and has built up a small but growing base of customers consisting o local householders and some corporate catering clients. Carl Bonner, the owner-manager of Carl's Cupcakes, is an old friend of yours from high school. Carl knows that you are studying accounting at university and contacts you for some advice about four business decisions he is currently considering. Please consider each of the next questions one to four independently

Explanation / Answer

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1. Statement of Cash Flow Cash flows from operating activities: Cash received from customers (38000+652900-36000) 654900 Cash paid for merchandise -217900 Cash paid for rent -50000 Cash paid for Advertising -12000 Cash paid for Insurance -3500 Cash paid for utilities -15500 Cash paid for Interest -8000 Cash paid for Income Tax -55000 Cash paid to employee (10000+147000-12000) -145000 Net Cash provided by operating activities 148000 Cash flows from investing activities: Purchase of Bakery equipment -50000 Net Cash used by inesting activities -50000 Cash flows from financin activities: Proceeds from Loan 30000 Drawing' owner's -25000 Net Cash provided by financing activities 5000 Net Increase in cash 103000 Cash Balance, beginning 77000 Cash Balance, ending 180000 2. Indirect Method Cash flows from operating activities: Net Income 140000 adjustment to reconcile net income to net cash provided by operating activities: Depreciation 25000 Decrease in Accounts Receivable 2000 Increase in Inventory -26000 Increase in Accounts Payable 5000 Increase in Wages Payable 2000 Net Cash provided by Operating Activities 148000 3. Operating Cash Flow Margin Cash Flow from Operating Activities 148000 Net Sales 652900 Operating Cash Flow Margin (148000/652900)           0.23 or 22.67% Since Company is generating less cash flow then Net sales (margin is below 1), it will not be feasible to use operating cash flow for planned expansion

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