Question 6 (11 marks)

The following information relates to Sonata Ltd.

(a) At the beginning of the accounting period the company has a salary payable liability of $300 and at the reporting date a salary payable of $400. During the year the salary expense shown in the income statement was $700.

(b) At the beginning of the accounting period the company has property plant and equipment (PPE) with a carrying amount of $300. At the end of the accounting period, the carrying amount of the PPE is $1,000. During the year depreciation charged was $90, a PPE with a carrying amount of $70 was sold for $50.

(c) At the beginning of the accounting period the company has retained earnings of $1000 and at the end of the accounting period the balance of the retained earnings is $1500. The reported profit for the year was $3800.

(d) Sonata Ltd also provides you with the following information on its sale and collection of accounts receivable:

Sales for the year $20,000

Discounts provided to customers for early payment $500

Doubtful debts expense for the year $200

Opening balance of accounts receivable $4,000

Closing balance of accounts receivable $3,500

Opening balance of the allowance for doubtful debts $400

Closing balance of the allowance for doubtful debts $320

Required:

(a) Calculate the cash paid for salary (2 marks)

(b) Calculate the cash paid to buy new PPE (3 marks)

(c) Calculate the dividend paid (3 marks)

(d) Calculate cash collected from customer (3 marks)