1. How would you describe Korumburra Boards’ cash flows for 2020?

Write a brief discussion.

Korumburra Boards is a small company that manufactures and sells surfboards in Byron Bay. Tad Marks, the founder of the company, is in charge of the design and sale of the surfboards, but his background is in surfing, not business. As a result, the company’s financial records are not well maintained.
The initial investment in Korumburra Boards was provided by Tad and his friends and family. Because the initial investment was relatively small, and the company has made surfboards only for its own store, the investors have not required detailed financial statements from Tad. But thanks to word of mouth among professional surfers, sales have picked up recently and Tad is considering a major expansion. His plans include opening another surfboard store in Manly, as well as supplying his ‘sticks’ (surfer lingo for boards) to other sellers.

Korumburra Boards currently pays out 40 per cent of profit for the year as dividends to Tad and the other original investors and it has a 30 per cent tax rate. You are Christina’s assistant and she has asked you to prepare the following:
1. A statement of profit or loss for 2019 and 2020.
2. A statement of financial position for 2019 and 2020.
3. Operating cash flow for each year.
4. Cash flow from assets for 2020.
5. Cash flow to creditors for 2020.
6. Cash flow to shareholders for 2020.

Transcribed Image Text:

Cost of sales 2020 2019 $322 742 $255 605