Refer to the information presented for Lancer Ltd. in P167A. Additional information: Refer Data in P16-7A, Additional

Refer to the information presented for Lancer Ltd. in P16–7A. Additional information:

Refer Data in P16-7A,

Additional Information:

1. Accounts payable relate only to merchandise creditors.

2. Accrued expenses payable and prepaid expenses relate to operating expenses.

Instructions

Prepare a cash flow statement for the year using the direct method?

TAKING IT FURTHER

Lancer Ltd.’s cash balance more than doubled in 2014. Briefly explain what caused this, using the cash flow statement.

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LANCER LTD. Balance Sheet December 31 Assets 2014 2013 $ 97,800 $ 48,400 Cash Accounts receivable 75,800 43,000 Inventory Prepaid expenses Property, plant, and equipment Accumulated depreciation 92,850 122,500 38,400 26,000 356,500 (52,000) 398,000 (50,000) Total assets $682,500 $514,750 Liabilities and Shareholders’ Equity Accounts payable Accrued expenses payable Notes payable (non-trade) Common shares $ 77,300 $107,000 11,500 110,000 7,000 150,000 175,000 220,000 Retained earnings 234,000 105,450 Total liabilities and shareholders' equity $682,500 $514,750 LANCER LTD. Income Statement Year Ended December 31, 2014 Sales $492,780 Cost of goods sold Gross profit Operating expenses Depreciation expense Loss on sale of equipment Profit from operations Other expenses Interest expense 185,460 307,320 $62,410 46,500 7,500 116,410 190,910 4,730 Profit before income tax 186,180 Income tax expense 45,000 Profit $141,180