GROUP ASSIGNMENT ON CASH FLOW STATEMENT– ACT 2010A
ATTEMPT ALL QUESTIONS
Only one hard copy per group will be submitted on Monday 20/3/2023
Q1.
The following data relates to Larson Co. for the year ending December 31, 2020 and the
preceding year ended December 31, 2019.
Year
Year
2020
2019
$
$
Cash
100,000
78,000
Accounts receivable (net)
78,000
85,000
Inventories
101,500
90,000
Equipment
410,000
370,000
Accumulated depreciation
(150,000)
(158,000)
539,500
465,000
Accounts payable (merchandise creditors)
Cash dividends payable
Common stock, $10 par
Paid-in capital in excess of par-Common Stock
Retained earnings
58,500
5,000
200,000
55,000
4,000
170,000
62,000
214,000
539,500
60,000
176,000
465,000
Additional information:
1. Equipment costing $125,000 was purchased for cash.
2. Equipment costing $85,000 with accumulated depreciation of $65,000 was sold
for $15,000.
3. The stock was issued for cash.
4. The only entries in the retained earnings account were net income of $51,000 and
cash dividends declared of $13,000.
Prepare a statement of cash flows using the indirect method of reporting cash flows from
operating activities.
Q2.
The comparative balance sheets of Colgate Toothpaste Company for year ending December 31,
2020 and 2019 appears below in condensed form:
2020
2019
$
$
45,000
53,500
51,300
58,000
147,200
135,000
0
60,000
493,000
375,000
(113,700)
(128,000)
622,800
553,500
Cash
Accounts receivable (net)
Inventories
Investments
Equipment
Accumulated depreciation-equipment
1
Accounts payable
Bonds payable, due 2023
Common stock, $10 par
Paid-in capital in excess of par
common stock
Retained earnings
61,500
0
250,000
42,600
100,000
200,000
75,000
236,300
622,800
50,000
160,900
553,500
The income statement for the current year is as follows:
Sales
Cost of merchandise sold
Gross profit
Operating expenses:
Depreciation expense
24,700
Other operating expenses
75,300
$623,000
348,500
274,500
100,000
174,500
Income from operations
Other income:
Gain on sale of investment
Other expense:
Interest expense
5,000
12,000
(7,000)
167,500
64,100
103,400
Income before income tax
Income tax
Net income
Additional information for the current year is as follows:
(a)
Fully depreciated equipment costing $39,000 with no salvage value, was scrapped.
(b)
New equipment was purchased for $157,000.
(c)
Bonds payable for $100,000 were retired by payment at their face amount.
(d)
5,000 shares of common stock were issued at $15 each for cash.
(e)
Cash dividends declared were paid $28,000.
(f)
All sales are on account.
Prepare a statement of cash flows, using the direct method of reporting cash flows from operating
activities.
2