Exercise 13-8 a The comparative statement of financial position for Crane Retail

Question

Exercise 13-8 a The comparative statement of financial position for Crane Retailers Ltd. follows: CRANE RETAILERS LTD. Assets 2018 2017 s 25,000 10,000 50,000 42,000 167,000 138,000 169,000 85,000 (46,000) (23,000) $365,000 $252,000 Accumulated depreciation Total assets Liabilities and Shareholders Equity Accounts payable Bank loan payable (noncurrent) Common shares Retained earnings s 49,000 37,000 100,000 71,000 63,000 58,000 153,000 86,000 Total liabilities and shareholders' equity $365,000 $252,000 Additional information 1. Net income was $67,000 in 2018 2. Depreciation expense was $23,000 in 2018. 3. Payments made to the bank pertaining to the bank loan were $10,000 in 2018. Some new loans wereobtained that year 4. Common shares were issued in 2018 and no shares have been bought back by the company S. In 2018, no furniture was sold.

Explanation / Answer

a) Crane Retailers Ltd.

Statement of cash flows- Indirect method for the year ended 2018  

Working Note: Bank Loan A/c (Amount in $)

Cash Flow from operating activities:- Amount in $ Amount in $ Net Income 67,000 Adjustments to reconcile net income to net cash provided by operating activities: Add: Depreciation 23,000 Less: Increase in accounts receivable (50,000-42,000) (8,000) Less: Increase in Inventory (167,000-138,000) (29,000) Add: Increase in Accounts payable (49,000-37,000) 12,000 Total value of adjustments (2,000) Net cash provided by operating activities (A) 65,000 Cash flows from investing activities Purchase of Furniture (169,000-85,000) (84,000) Net cash used in investing activities (B) (84,000) Cash flows from financing activities Received from Bank for Loan (100,000+10,000-71,000) 39,000 Payment of bank Loan (10,000) Issue of common stock (63,000-58,000) 5,000 Net cash provided by financing activities (C) 34,000 Net Increase in cash (A+B+C) 15,000 Cash, January 1 10,000 Cash, December 31 25,000

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