Question

Question #4 (20 marks) Wolfsong Company's I/S, CFS, and B/S follow I/S (for 2018) Sales Expenses CGS $43,000 Wages 8,600 Insurance 800 $63,500 Depreciation Interest Tax Total expenses 1,700 900 2,900 57,900 NI $ 5,600 from CFS (for 2018) Cash collections customers $62,600 Cash Disbursements For: Purchases 46,300 Wages 8,300 Insurance 600 Interest 900 Taxes 3,000 Total disbursements CFO Investing: Acquisition of plant assets Financing: Issue of B/P 5,500 Div (2.900) CFF TCF 59.200 3,500 (5,500) 2.600 5600 BIS Dec 31, 2018 Dec 31, S? 2017 Assets Cash AR Inventory Prepaid insurance S 500 3,200 6,000 700 ? ? Plant assets Ace. Dep ? ? 19,500 (5,700)

Answer 1

BS  

	Dec 31 2018 ($)	Dec 31 2017 ($)
Assets
Cash	1100 (500+600)	500
A/R	4100	3200
Inventory	9000	6000
Pre paid Insurance	500	700
Plant Assets	25000 (19500+5500)	19500
Accumulated depreciation	(6800) [5100+1700]	(5100)
Liabilities & shareholders equity
A/P	700	1000
Wages /P	900	600
Tax/P	700	800
B/P	13000	7500
Share capital	9000	9000
R/E	8600 (5900+5600-2900)	5900
Total liabilities & Equity	32900	24800

CFO (Cash flow from Operating Activities) - Indirect methode

NI 5600

Adjustments to reconcile net income to cash flow provided by operating activities :

Depreciation 1700

Increase in AR (900)

Increase in Inventory (3000)

Decrease in prepaid insurance 200

Decrease in AP (300)

Increase in Wages/P 300

Decrease in Tax payable (100)

Cash flow from Operating Activities = 3500