Question
Blossom Limited, which follows IFRS, chooses to classify interest and dividends received as well as interest paid as operating activities and dividends paid as financing
Blossom Limited, which follows IFRS, chooses to classify interest and dividends received as well as interest paid as operating activities and dividends paid as financing activities. Blossom had the following information available at the end of 2020:
BLOSSOM LIMITED Comparative Statement of Financial Position December 31, 2020 and 2019 | ||||||||
2020 | 2019 | |||||||
Cash | $28,000 | $ 0 | ||||||
Accounts receivable | 13,300 | 16,650 | ||||||
FV-NI investments | 18,600 | 27,600 | ||||||
Inventory | 42,000 | 37,800 | ||||||
Prepaid rent | 6,820 | 13,420 | ||||||
Prepaid insurance | 2,010 | 1,290 | ||||||
Supplies | 3,000 | 2,910 | ||||||
Land | 126,300 | 179,500 | ||||||
Buildings | 350,000 | 350,000 | ||||||
Accumulated depreciation - Buildings | (105,000 | ) | (87,500 | ) | ||||
Equipment | 518,000 | 404,000 | ||||||
Accumulated depreciation - Equipment | (130,000 | ) | (112,000 | ) | ||||
Patents | 90,000 | 90,000 | ||||||
Accumulated amortizationPatents | (45,000 | ) | (40,000 | ) | ||||
Total assets | $918,030 | $883,670 | ||||||
Temporary bank overdraft | $ 0 | $18,800 | ||||||
Accounts payable | 22,000 | 20,000 | ||||||
Income tax payable | 5,000 | 6,000 | ||||||
Salaries and wages payable | 5,000 | 1,300 | ||||||
Short-term notes payable (trade) | 10,000 | 10,000 | ||||||
Long-term notes payable (non-trade) | 60,000 | 70,000 | ||||||
Deferred tax liability | 30,000 | 25,000 | ||||||
Bonds payable | 375,000 | 375,000 | ||||||
Common shares | 257,030 | 242,970 | ||||||
Retained earnings | 154,000 | 114,600 | ||||||
Total liabilities and shareholders equity | $918,030 | $883,670 | ||||||
ASHLEY LIMITED Income Statement Year Ended December 31, 2020 | ||||||||
Sales revenue | $1,190,000 | |||||||
Cost of goods sold | (781,000 | ) | ||||||
Gross margin | 409,000 | |||||||
Operating expenses | ||||||||
Selling expenses | $39,200 | |||||||
Administrative expenses | 124,000 | |||||||
Salaries and wages expense | 92,300 | |||||||
Depreciation and amortization expense | 40,500 | |||||||
Total operating expenses | (296,000 | ) | ||||||
Income from operations | 113,000 | |||||||
Other revenues/expenses | ||||||||
Gain on disposal of land | 7,400 | |||||||
Investment income (Note 1) | 6,500 | |||||||
Interest expense | (42,100 | ) | (28,200 | ) | ||||
Income before taxes | 84,800 | |||||||
Income tax expense | (28,300 | ) | ||||||
Net income | $56,500 |
Note 1: Investment income generated by (FV-NI) investments includes dividend income of $2,300 and a gain on disposal of investments of $4,200. (a) Prepare a statement of cash flows for Blossom Limited using the direct method, accompanied by a schedule that provides cash flow from operations using the indirect approach. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000). Round answers to 0 decimal places, e.g. 5,275.)
Blossom Limited Statement of Cash Flows December 31, 2020For the Year Ended December 31, 2020For the Month Ended December 31, 2020 |
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