Question

Exercise 22-16 (b) (direct method) Information from the statement of financial position and statement of income is given below for Blue Road Inc., a company following IFRS, for the year ended December 31. Blue Road has adopted the policy of classifying interest paid as operating activities and dividends paid as financing activities. Comparative Statement of Financial Position, at December 31 2020 2019 Cash $71,300 $47,850 Accounts receivable 91,600 37,500 Inventory 127,800 107,650 Investments in land 87,300 110,000 Property, plant, and equipment 291,000 213,000 Accumulated depreciation (49,000) (40,000) $620,000 $476,000 Accounts payable Accrued liabilities Notes payable Common shares Retained earnings $53,700 12,500 138,000 230,000 185,800 $620,000 $48,780 19,430 75,000 203,000 129,790 $476,000 Statement of Income, year ended December 31, 2020 Revenues Sales revenue $289,930 Gain on disposal of investment in land 5,000 Gain on disposal of equipment 8,890 303,820 Expenses Cost of goods sold $96,660 Depreciation expense 58,700 Operating expenses 14,740 Income tax expense 38,100 Interest expense 2,840 211,040 Net income $92,780 Additional information: 1. Investments in land were sold at a gain during 2020. 2. Equipment costing $56,100 was sold for $15,290, resulting in a gain. 3. Common shares were issued in exchange for some equipment during the year. No other shares were issued. 4. The remaining purchases of equipment were paid for in cash. Prepare the operating activities section of the statement of cash flows using the direct method. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)

Answer 1

Cash flows from operating activities:
Cash Inflows:
From customers				$      235,830.00
Cash Outflows:
To suppliers of goods				$    (111,890.00)
For Interest				$         (2,840.00)
For Other Expense				$      (21,670.00)
For Income Tax				$      (38,100.00)
Net cash flow from operating activities					$      61,330.00

Workings:

	Cash Receipts from Customers
	Net Sales				$      289,930.00
Add:	Beginning A/R				$        37,500.00
Less:	Ending A/R				$        91,600.00
					$      235,830.00

	Cash Payments to Suppliers
	Cost of Goods Sold				$        96,660.00
Add:	Ending Inventory				$      127,800.00
Less:	Beginning Inventory				$      107,650.00
Add:	Beginning A/P				$        48,780.00
Less:	Ending A/P				$        53,700.00
					$      111,890.00

	Interest Payments
	Beginning Interest Payable
Less:	Ending Interest Payable
Add:	Interest Expense			$    2,840.00
				$    2,840.00

	Operating Expense
	Operating Expense			$ 14,740.00
Add:	Beginning Payable			$ 19,430.00
Less:	Ending Payable			$ 12,500.00
				$ 21,670.00

	Income Tax Payments
	Beginning Income Tax Payable
Less:	Ending Income Tax Payable
Add:	Income Tax Expense			$ 38,100.00
				$ 38,100.00

Note: Is this correct?