Question 5: Statement of Cash Flows (19 marks)

Below is the information relating to The Lewis Ltd for the year ended 30 June 2019

The Lewis Ltd

Comparative Statement of financial positions

as at 30 June 2019

2019 2018

Assets

Cash $47,500 $23,625

Accounts receivable 44,650 29,250

Merchandise inventory 60,950 51,325

Investments (long term) 42,300 43,500

Property, plant, and equipment 125,000 102,500

Accumulated depreciation (24,750) (20,000)

Total assets $296,650 $230,200

Liabilities and Equity

Accounts payable $26,350 $24,140

Unearned revenue 1,250 750

Accrued expenses 6,050 9,415

Debentures payable 50,000 35,000

Share capital 125,000 100,000

Retained earnings 87,000 60,895

Total liabilities and equity $295,650 $230,200

The Lewis Ltd

Statement of comprehensive income

for the year ended 30 June 2019

Sales $150,000

Gain on sale of equipment 4,375

154,375

Less:

Cost of sales 49,730

Operating expenses (including depreciation

of $1,200 p.a.) 8,535

Depreciation expense $24,850

Interest expense 2,720 84,635

Income before income taxes 69,740

Income tax expense 3,635

Profit after income tax $ 66,105

The following additional data were provided:

1. New equipment and machinery were purchased for cash during the year.
2. Investments were sold at cost.
3. Equipment costing $23,500 was sold for $7,775.
4. Accounts payable pertain to merchandise inventory creditors.

Required:

Prepare a Statement of cash flows for The Lewis Ltd for the year ended 30 June 2019 using the direct method.