Good evening!! i've already finished question a-f, just dont understand why "cash payment for expenses" is 37 in the red circle. As the question said "all expenses except COGS and new taxes has been paid in cash", so the "cash payment for the expenses" should be 23000+8000+5000+3000=39000. Why is 37?
Below is a Statement of Financial Position for a small business as at the end of 2019. ($'000) ($'000) Current Assets Cash Inventory Accounts Receivable Prepaid Lease 6 23 15 Current Liabilities Suppliers Accounts Payable Taxes Payable 12 2 2 Non-Current Liabilities Interest Only Bank Loan 59 Non-Current Assets Property, Plant & Equipment Accumulated Depreciation 60 (20) Equity Contributed Capital Retained Earnings 10 ? a) Calculate the Retained Earnings for this business at the end of 2019. Below is a list of the general ledger account totals from the trial balance at the end of 2020 for the business. Cr Dr ? 15,000 ? 0 ? Name of Account Cash Inventory Accounts Receivable Prepaid Lease Property Plant & Equipment Accumulated Depreciation Suppliers Accounts Payable Taxes Payable Interest Only Bank Loan Contributed Capital Retained Earnings Credit Sales Cash Sales Cost of Goods Sold Wages Expense Lease Expense Utilities Expenses Interest on Bank Loan Dividends Paid ? 20,000 0 59,000 10,000 ? 179,000 30,000 88,000 23,000 8,000 5,000 3,000 50,000 Except for the cost of goods sold and new taxes, assume that all expenses are paid for in cash. The business had new equipment purchases during 2020 of $5,000 and depreciation on all property, plant & equipment is calculated using the reducing balance method with an annual depreciation rate of 39%. Question 1 continued. b) If the business pays a flat tax rate of 20%, construct a Statement of Financial Performance for the business for 2020 showing: i) gross profit ii) operating profit iii) net profit after tax c) Show the journal entries for recording the new taxes payable. d) Calculate the total inventory purchases for 2020 and the total cash amounts paid to suppliers. e) If total cash receipts from accounts receivable were $175,000, calculate the end of year balance for accounts receivable. f) Based on all of the above information, construct an updated Statement of Financial Position for the business at the end of 2020. Note the Business's final cash position will be a balancing item assuming all of the other information has been processed correctly. g) Based on all of the above information, construct a Statement of Cashflows for 2020 and check that the balance sheet cash position is correct. ($'000) f.) Statement of Financial Position at the end of 2020 ($'000) Current Assets Current Liabilities Cash 45.00 Suppliers Accounts Payab Inventory 15.00 Taxes Payable Accounts Receivable 19.00 Prepaid Lease 20.00 12.89 Non-Current Assets Property, Plant & Equipment Accumulated Depreciation Non-Current Liabilities Interest Only Bank Loan 59.00 65.00 (37.55) Equity Contributed Capital Retained Earnings 10.00 4.56 Total Liabilities & Shareholder's equity Total Assets 106.45 106.45 ($'000) g.) Statement of Cash Flows for 2020 ($'000) Operating Activities Cash receipts from accounts receivable Cash sales Cash payment to suppliers Cash payment for expenses ncome tax paid Cash generated from operating activities 175.00 30.00 (72.00) (37.00) (2.00) 94.00 Investing Activities Purchase of equipment Cash paid for investing activities (5.00) (5.00) Financing Activities Dividends Paid Cash paid for financing activities (50.00) (50.00) Increase in cash Cash, beginning Cash, ending 39.00 6.00 45.00
