Question

Information from the statement of financial position and statement of income are 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 2017 2016 Cash Accounts receivable Inventory Investments in land Property, plant, and equipment Accumulated depreciation $71,300 $47,850 37,500 127,800 107,650 87,300110,000 291,000 213,000 (49,000) (40,000) $620,000 $476,000 91,600 Accounts payable Accrued liabilities Notes payable Common shares Retained earnings $53,700 $48,780 19,430 75,000 230,000 203,000 185,800 129,790 $620,000 $476,000 12,500 138,000

Answer 1

	Statement of cashflows-Indirect method
				$	$
Cashflow from operating activities:
Net income					92780
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation expense				58700
Gain on sale of investment in land				-5000
Gain on sale of equipment				-8890
Increase in accounts receivable			(91600-37500)	-54100
Increase in inventory			(127800-107650)	-20150
Increase in accounts payable			(53700-48780)	4920
Decrease in accrued liabilities			(19430-12500)	-6930	-31450
Net cash provided by operating activities (A)					61330
Cashflow from financing activities:
Issue of notes			(138000-75000)	63000
Payment of dividend			(Note:3)	-36770
Net cash provided by financing activities (B)					26230
Cashflow from investing activities:
Sale of investment in land			(Note:1)	27700
Equipment sold				15290
Equipment purchased for cash			(Note:2)	-107100
Net cash provided by investing activities (C)					-64110
Net increase in cash			(A)+(B)+©		23450
Add: beginning balance of cash					47850
Ending balance of cash					71300
Note:1 -Sale value of investment sold
Analyze investment in land
				$
Beg bal.				110000
Less: End bal.				87300
				22700
Add: Gain on sale				5000
Sale value of investment				27700
Note:2- Equipment purchased for cash
Analyze property, plant and equipment account
				$	$
Ending balance					291000
Add: Cost of equipment sold					56100
					347100
Less:
Beg bal				213000
Equipment purchased for common shares
(Increase in common shares)			(230000-203000)	27000	240000
Purchased for cash					107100
Note:3- Dividend paid
Analyze retained earnings account
				$
Beg bal				129790
Add: Net income				92780
				222570
Less: End bal.				185800
Dividend paid				36770
General notes:
Depreciation is a non cash.Hence added back to net income
Gain on sale of investment and equipment is a non-recurring item. Hence to deducted from net income.
Increase in current assets results in cash outflow.Hence, deducted.
Increase in current liability results in cash inflow. Hence, addded.
Decrease in current liability results in cash outflow. Hence, deducted.
Non-cash investing and financing activities:
					$
Equipment purchased for common shares				(Note:2)	27000
Non-cash investing and financing activities					27000