Use the following information for questions 42-46 (Note: an amount in a bracket

Question

Use the following information for questions 42-46 (Note: an amount in a bracket indicates a negative amount) The Wallis Corporation provides moving services to local clients. Wallis reported the following data for 2014: WALLIS CORPORATION Statement of Financial Position As at December 31,2014 2014 2013 Assets Cash Accounts receivable Prepaid insurance $ 88,600 S 49,100 59,400 60,000 168,500 305,000 (110,400) 105,900) 85,000 70,000 243,600 360,000 Total current assets Property, equipment and vehicles Accumulated depreciation Total non-current assets Total Assets 199.100 249,600 Liabilities and Shareholders' Equity Accounts payable Wages Payable S 21,500 18,600 Total current liabilities Bank loan payable 24,500 50,000 74.500 22,600 60,000 82,600 200,000 Total liabilities Common Shares Retained Earnings Total Shareholders' Equity Total Liabilities & Shareholders' Equity 200,000 418,700 285,000 $403.200 536180 WALLIS CORPORATION Income Statement For the Year Ended December 31, 2014 Moving revenue Gain on Sale of Equipment $450,000 Total revenues Expenses: $455,000 Depreciation expense Wage expense Vehicle maintenance expense Interest expense 59,500 134,000 102,400 5.400 301.300 Net income Additional data: (1) Vehicles originally costing $65,000 were sold for $15,000. (2) Dividends were paid during the year.

Explanation / Answer

42. ANSWER: c. 174500 Workings: Net Income 153700 Adj.for non-cash item Less: Gain on sale of equipment -5000 Add:Depreciation expense 59500 Adjusted Net income 208200 Working capital changes: Less: Increase in a/cs. Receivables(85000-59400) -25600 Less: Increase in prepaid Insurance(70000-60000) -10000 Add: Increase in a/cs.payable(21500-18600) 2900 Less: Decrease in wages payable(4000-3000) -1000 Net w/c changes -33700 Cash flow from operating activities 174500 43. Cash collected from customers-- $ 424400 ANSWER: e. None of the above Workings: Beginning a/cs. Recivables 59400 Add: Moving Revenue as per Income statement 450000 Less: Ending a/cs. Receivables 85000 Cash collected from customers 424400 44. Cash paid for wages : ANSWER: c. 135000 Workings: Wages payable Beginning balance 4000 Add: Wages expense as per Income statement 134000 Less: Ending balance -3000 Cash paid for wages 135000 45.Cash used in Investing activities ANSWER: c. (105000) Workings: P&E & Vehicles Beginning balance 305000 Cost of sold vehicle 65000 Purchase (Bal.fig.) 120000 Ending balance 360000 425000 425000 Investing activities Putchase of P&E&vehicles -120000 Sale proceeds of vehicles 15000 Cash used in Investing activities -105000 46. Cash used in Financing activities-- (30000) ANSWER: e. None of the above Workings: Financing activities: Retirement of Bank Loan(60000-50000) Payment of dividends(85000+153700-218700) -10000 Cash used in Financing activities -20000 -30000 Cash flow statement (VERIFICATION) Beginning cash balance 49100 Cash from Opg. Activities 174500 Cash used in Investing activities -105000 Cash used in Financing activities -30000 Ending cash balance 88600

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