Need help with question #5

I provided my answers for questions #1-4

Thank you

Coyote Ltd, a private company reporting under ASPE, reported the following for the years ended May 31, 2017, and 2016

Coyote Ltd. Balance sheet May 31

Assets 2017 2016

Cash $12,600 $43,000

Accounts recievable $85,000 $76,000

Inventory $172,000 $160,000

Prepaid expenses $5,000 $7,500

Land $125,000 $75,000

Equipment $325,000 $190,000

Accumulated depreciation ($68250) ($40,000)

Total assets $656,350 $511,500

Liability and Shareholder's equity

Accounts payable $43,000 $38,000

Dividends payable $7,500 $5,000

Income taxes payable $2,500 $6,000

Mortgage payable $125,000 $80,000

Common shares $217,000 $167,000

Retained earnings $261,350 $215,500

Total liability and shareholder's equity. $656,350 $511,500

Additional information

1. Profit for 2017 was $108,000

2. common shares were issued for $50,000

3. Land with a cost of $50,000 was sold at a loss of $20,000

4. Purchased land with a cost of $100,000 with a $55,000 down payment and financed the remainder with a mortgage note payable.

5. No equipment was sold during 2017

Instruction:

1. Prepare a cash flow statement for the year using the indirect method.

2. Is it unfavorable for a company to have a net cash outflow from financing activities?

3. Using horizontal analysis, calculate the percentage change between 2016 and 2017.

4. Using vertical analysis, calculate the percentage of the base amount for each year.

5. Based on your calculation in part (3) and (4), identify any significant changes from 2016 to 2017.

1. Prepare a cash flow statement for the year using the indirect method COYOTE LTD Cash Flow Statement-Indirect Method Year Ended May 31, 2017 Operating activities Profit Adjustments to reconcile profit to $108,000 net cash provided by operating activities $28,250 20,000 (9,000) (12,000) 2,500 5,000 2,500 3,500 $33,750 Net cash provided by operating activities...... $141,750 Investing activities Sale of land 30,000 (55,000) Purchase of land (Note1. Net cash used by investing activities................... $(160,000) Financing activities 50,000 (62,150) Net cash provided by financing activities....... $(12,150) (30,400) 43,000 512.600 (1) Increase in accumulated depreciation (68,250-40,000) (2) Increase in equipment (325,000 190,000) Note 1: Land was purchased for $100,000 with a $55,000 down payment and remainder with a mortgage note payable 2. Is it unfavourable for a company to have a net cash outflow from financing activities? A net cash outflow from financing activities can be either favourable or unfavourable. It is only favourable if the company is increasing their funding through debt or issue of shares in order to obtain long-term assets. It is unfavourable when the company is trying to make cash when they do not have another way of obtaining it. Increase (Decrease) Amount (30,400) $9,000 Current Assets Cash Accounts Receivable Inventory Prepaid Expenses 2017 $12,600 85,000 2016 $43,000 76,000 172,000 160,000$12,000 7,500 Percent (7070)26, 11.84% 5,000 (2,500) (33-33)96 Non-Current Assets Land Equipment Accumulated Depreciation 125,000 325,000 (68,250) $656,350 75,000 190,000 (40,000) $511,500 50,000 135,000 (28,250) $144850 66.66% 71.10% (70.63% 28.32% Total Assets Current Liabilities 2017 2016 Amount $5,000 $2,500 (3,500 (58.33)% Percent 13.16% 50% $43,000 $38,000 Accounts Payable Dividends Payable Income Taxes Payable 7,500 5,000 2,500 6,000 Non-Current Liabilities Mortgage Payable 125,000 80,000 45,000 56.25% Shareholder's Equity 217,000 261,350 $656,350 50,000 45,850 $144,850 Common Shares 167,000 215,500 $511,500 29.94% 21.28% 28.32% Retained Earnings Total Liabilities & Shareholders Equity Current Assets Cash Accounts Receivable Inventory Prepaid Expenses 2017 $12,600 85,000 172,000 5,000 Percent 1.92% 12.95% 26.21% 0.76% 2016 $43,000 76,000 160,000 7,500 Percent 8.41% 14.86% 31.28% 1.47% Non-Current Assets Land Equipment Accumulated Depreciation 125,000 325,000 (68,250) $656,350 19.04% 49.52% (10.40% 100.00% 75,000 190,000 (40,000) SSII,500 14.66% 37.15% (7.82 100.00% Total Assets Current Liabilities Accounts Payable Dividends Payable Income Taxes Payable 2017 $43,000 7,500 2,500 Percent 6.55% 1.14% 0.38% 2016 $38,000 5,000 6,000 Percent 7.43% 0.98% 1.17% Non-Current Liabilities Mortgage Payable 125,000 19.04% 80,000 15.64% Shareholder's Equity 33.06% 39.82% 00% 167,000 215,500 s511,500 326% 42.13% 100.00% Common Shares 217,000 261,350 $656,350 Retained Earnings Total Liabilities & Shareholders Equity