Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cheyenne Inc., a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The company is currently preparing its statement

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Cheyenne Inc., a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows and follows the policy of classifying interest paid as operating cash flows and dividends paid as financing cash flows. The comparative statement of financial position and income statement for Cheyenne as of May 31, 2020, are as follows: CHEYENNE INC. Statement of Financial Position As at May 31 Current assets 2020 2019 Cash $34,400 $20,110 Accounts receivable 78,150 55,950 Inventory 189,010 199,480 Prepaid expenses 8,600 7,630 Total current assets 310,160 283,170 Plant assets 603,500 510,500 Less: Accumulated depreciation 151,110 122,110 Net plant assets 452,390 388,390 Total assets $762,550 $671,560 Current liabilities Accounts payable $121,350 $115,350 Salaries and wages payable 61,460 72,630 Interest payable 25,860 23,080 Total current liabilities 208,670 211,060 Mortgage payable 83,560 109,000 Total liabilities 292,230 320,060 Shareholders' equity Common shares 336,190 280,000 For the Year Ended May 31, 2020 Sales $ 1,336,360 Cost of goods sold 811,000 Gross margin 525,360 Expenses Salaries and wages expense 201,000 Interest expense 65,000 Other operating expenses 23,100 Depreciation expense 29,000 Total operating expenses 318,100 Operating income 207,260 Income tax expense 65,800 Net earnings $ 141,460 The following is additional information about transactions during the year ended May 31, 2020, for Cheyenne Inc., which follows IFRS. 1. Plant assets costing $93,000 were purchased by paying $51,000 in cash and issuing 5,000 common shares. 2. The "other expenses relate to prepaid items. 3. In order to supplement its cash, Cheyenne issued 4,000 additional common shares. 4. There were no penalties assessed for the repayment of the mortgage. 5. Cash dividends of $78,830 were declared and paid at the end of the fiscal year. Prepare a statement of cash flows for Cheyenne Inc. for the year ended May 31, 2020, 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).) Statement of Cash Flows (Direct Method) For the Year Ended May 31, 2020 Cash Flows from Operating Activities Cash Received from Customers $ Cash Paid to Suppliers for Goods for Resale Cash Paid to Suppliers for Other Operating Expenses IMAI Cash Paid to and on Behalf of Employees Cash Paid for Interest Cash Paid for Income Taxes Cash Paid for Interest Cash Paid for Income Taxes Net Cash Provided by Operating Activities Net Cash Provided by Investing Activities Purchase of Plant Assets Cash Flows from Financing Activities Proceeds from Issuance of Common Shares Dividends Paid Principal Payment of Mortgage Net Cash Used by Financing Activities Net Increase in Cash Cash, June 1, 2019 Cash, May 31, 2020 $ Schedule of non-cash investing and financing activities Issuance of Common Shares for Plant Assets $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Oracle E Business Suite Common Issues

Authors: Jeffrey T. Hare

1st Edition

1329529766, 978-1329529762

More Books

Students also viewed these Accounting questions