Exercise 13-12 (Direct Method) The comparative unclassified statement of financi

Question

Exercise 13-12 (Direct Method) The comparative unclassified statement of financial position for Puffy Ltd. follows: PUFFY LTD. Statement of Financial Position December 31 2015 Assets Cash Accounts receivable Merchandise inventory Land Equipment Accumulated depreciation Total assets 2014 $59,970 $21,520 73,200 186,660 190,950 71,750 101,460 266,830 197,220 (65,420_(31,770) $598,410 $552,580 78,620 Liabilities and Shareholders' Equity Accounts payable Bank loan payable Common shares Retained earnings Total liabilities and shareholders' equity $598,410 $38,100 $46,380 162,670 199,690 199,910 172,400 197,730 134,110 $552,580 Additional information: Profit was $104,040. Sales were $970,260. Cost of goods sold was $752,970. Operating expenses were $43,310, exclusive of depreciation expense. Depreciation expense was $33,650. Interest expense was $14,110. Income tax expense was $27,060. Land was sold at a gain of $4,880 No equipment was sold during the year. $37,020 of the bank loan was repaid during the year. Common shares were issued for $27,510. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Explanation / Answer

Sales 970260 Adjustments to a cash basis Accounts receivable as per 2014 73200 Accounts receivable as per 2015 -78620 964840 Less Cost of goods sold 752970 Adjustments to a cash basis Inventory as per 2014 -190950 Inventory as per 2015 186660 Accounts payable as per 2014 46380 Accounts payable as per 2015 -38100 756960 Operating expense less depreciation 43310 Interest expense 14110 Income tax 27060 Cash generated from operating activities 123400 Cash flow from Investing activities Purchase of Equipment -69610 sale of land 34590 Cash used in investing activities -35020 Cash flow from Financing activities Issue of common stock 27510 Dividend paid -40420 Bank loan repaid -37020 Cash used in financing activities -49930 Net Cash and cash equivalent 38450 Add Beginning cash and cash equivalent 21520 Ending cash and cash equivalent 59970

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