The financial statements of Customers First Ltd are presented as follows:

Customers First Ltd
Statement of Financial Position as of 30 June 2019
		$
		2019
Assets
Cash		26 000
Accounts receivables		28 000
Inventory		38 000
Property, plant and equipment		70 000
Accumulated depreciation		(27 000)
		135 000
Liabilities and equity
Accounts payable		31 000
Income tax payable		26 000
Notes payable		20 000
Share capital		25 000
Retained earnings		33 000
		135 000

Customers First Ltd
Income statement for year ended 30 June 2019
Sales
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Interest expense
Profit before income tax
Income tax expense
Profit

Additional information:

• Dividends were declared and paid.

• During the current year equipment was sold for $10 000 cash. This equipment cost $15 000 originally and had a carrying amount of $10 000 at the time of sale.

• All depreciation expense, $8000, is in the selling expense category.

• Additional equipment was purchased for cash.

• All operating expenses except for depreciation are paid in cash.

Required:

1. Prepare a statement of cash flows using the direct method. Show workings. (20 marks)

Please type your answers in the table below.

2. Reconcile profit to cash provided by operating activities (This is also the indirect method of calculating operating activity cash flows). (5 marks)

[Answer here]

1. Cash flow statement using the direct method:

Customers First Ltd

Statement of Cash Flows

for the year ended 30 June 2019

Cash flows from operating activities:
Net cash [ ] by operating activities
Cash flows from investing activities:
Net cash [ ] by investing activities
Cash flows from financing activities:
Net cash [ ] by financing activities
Net [ ] in cash
Cash at beginning of period
Cash at end of period
Non-cash investing and financing activities

[Show workings here]

2. Reconciliation of profit to cash provided by operating activities (indirect method):

Customers First Ltd

Note to Statement of Cash Flows

for the year ended 30 June 2019

Reconciliation of profit to cash provided by operating activities.

Cash flows from operating activities:

[Show workings here]