Question
Pronghorn Inc., a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The company is currently preparing its statement
Pronghorn 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 Pronghorn as of May 31, 2020, are as follows:
The following is additional information about transactions during the year ended May 31, 2020, for Pronghorn 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, Pronghorn issued 4,000 additional common shares. | |
4. | There were no penalties assessed for the repayment of the mortgage. | |
5. | Cash dividends of $78,220 were declared and paid at the end of the fiscal year. |
Using the indirect method, calculate only the net cash flow from operating activities for Pronghorn Inc. for the year ended May 31, 2020. (Show amounts that decrease cash flow with either a - sign e.g. -15,000 or in parenthesis e.g. (15,000).)
PRONGHORN INC. Statement of Financial Position As at May 31 Current assets 2020 2019 Cash $35,100 $20,730 Accounts receivable 79,680 56,480 Inventory 188,970 199,840 Prepaid expenses 9,240 7,660 Total current assets 312,990 284,710 Plant assets 600,500 507,500 Less: Accumulated depreciation 152,730 122,730 Net plant assets 447,770 384,770 Total assets $760,760 $669,480 Current liabilities Accounts payable $121,880 $115,880 Salaries and wages payable 61,090 72,660 Interest payable 26,310 23,440 Total current liabilities 209,280 211,980 Mortgage payable 80,860 106,000 Total liabilities 290,140 317,980 Shareholders' equity Common shares 335,890 280,000 Retained earnings 134,730 71,500 Total shareholders' equity 470,620 351,500 Total liabilities and shareholders' equity $760,760 $669,480 PRONGHORN INC. Income Statement For the Year Ended May 31, 2020 Sales $ 1,331,150 Cost of goods sold 803,000 Gross margin 528,150 Expenses Salaries and wages expense 200,000 Interest expense 66,700 Other operating expenses 24,200 Depreciation expense 30,000 Total operating expenses 320,900 Operating income 207,250 Income tax expense 65,800 Net earnings $ 141,450Step by Step Solution
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