Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your task is to prepare Avalon Ltd.'s Statement of Cash Flows for the year ended August 31, 2023. Avalon uses the direct method and uses

image text in transcribed
image text in transcribed
Your task is to prepare Avalon Ltd.'s Statement of Cash Flows for the year ended August 31, 2023. Avalon uses the direct method and uses the ASPE approach to reporting interest and dividend cash flows. Be sure to refer to the August 31, 2022 post-closing TB that has been provided. Notes: 1. Recall that the investment in the Percival Inc. bonds was purchased at a premium (see task 1). This means that a portion of the $9,500 cash that is received each compounding date relates to "amortizing" that premium (This excess can be considered as Percival Inc. paying off a portion of the extra amount that they borrowed beyond the maturity amount). That portion of the cash received will be an investing activity while the portion of the cash payment that relates strictly to interest will be an operating activity. 2. This company has some prepaid expenses. The prepaid expenses will be drawn into your reconstruction of "cash paid to suppliers" because they relate to other operating expenses. (Prepaid expenses are the "mirror image" of accounts payable.) So you will just need to include the change in prepaid expenses in the same reconstructing journal entry as the change in AP, change in inventory, change in COGS and change in other operating expenses to arrive at cash paid to suppliers. 3. Cash paid for purchases of furniture and equipment for the year ended August 31,2023 was $458,000. 4. Avalon paid $100,000 in tax installments during fiscal 2023. The Income tax payable account was debited for these installments. This will be one of the fiscal 2023 cash outflows relating to income tax. The other tax cash flow will be Avalon paying off its August 31,2022 balance in income tax payable, which can be found on the August 31,2022 TB

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managerial Accounting With Ready Notes

Authors: Ronald W. Hilton

1st Edition

0075619733, 978-0075619734

More Books

Students also viewed these Accounting questions

Question

Describe the patterns of business communication.

Answered: 1 week ago

Question

3. Provide two explanations for the effects of mass media

Answered: 1 week ago