Question

ACC201: Financial Accounting

Question 4 The Statements of Financial Position of EZ Pte Ltd as at 31 December 20X7 and 31 December 20X8, and its Statement of Profit or Loss for the year ended 31 December 20X8 are as follows: 20X7 EZ Pte Ltd Statements of Financial Positions As at 31 December, 20X8 and 20X7 20X8 Assets Current Assets Cash 166,800 Accounts receivable 254,000 Inventory 186,800 Interest receivable 11,000 Total current assets 620,600 127,800 177,400 312,000 9,800 627,000 Non-Current Assets Equipment Accumulated depreciation Equipment, net 938,600 (202,000) 736,600 994,600 (159,800) 834,800 Total assets 1,357,200 1,461,800 Liabilities and Shareholders' Equity Current Liabilities Accounts payable Income tax payable Total current liabilities 000 164,800 15,600 180,400 241,600 22,600 264,200 22. Shareholders' Equity Share capital Retained earnings Total shareholders' equity Total liabilities and shareholders' equity 1,000,200 176,600 1,176,800 1,357,200 959,200 238.400 1,197,600 1,461,800

Answer 1

Note: There is an error in the 20X8 balance sheet as the sum of the total current assets is $618600 and not $620600 as has been shown.

Taking all amounts as given, the cash balance on Dec. 31, 20X8 comes to $168800 not $166800 as given due to this difference in the total current assets. Kindly re-check.

EZ Pte Ltd
Statement of Cash Flows
For the Year Ended December 31, 20X8
Cash Flows from Operating Activities
Net income	122100
Adjustments to reconcile net income to net cash provided by operations:
Depreciation expense	84000
Gain on sale of equipment	-4400
Increase in Accounts Receivable	-76600
Decrease in Inventory	125200
Increase in Interest receivable	-1200
Decrease in Accounts payable	-76800
Decrease in Income tax payable	-7000
Net cash provided by operating activities		165300
Cash Flows from Investing Activities
Sale proceeds of equipment	48600
Purchase of equipment	-30000
Net cash provided by investing activities		18600
Cash Flows from Financing Activities
Issuance of Common stock	41000
Payment of cash dividends	-183900
Net cash used by financing activities		-142900
Net increase (decrease) in cash		41000
Cash balance at beginning of year		127800
Cash balance at end of year		168800

Working:

Cost of equipment sold = ($994600 + $30000) - $938600 = $86000

Accumulated depreciation on equipment sold = ($159800 + $84000) - $202000 = $41800

Book value of equipment sold = Cost - Accumulated depreciation = $86000 - $41800 = $44200

Sale proceeds of equipment = Book value + Gain on sale = $44200 + $4400 = $48600

Cash dividends paid = Beginning retained earnings + Profit after tax - Ending retained earnings = $238400 + $122100 - $176600 = $183900