PART C AND D

PART C AND D

Answer:

a) 1st part:

A. Cash flow from operations
Cash sales
Collection from debtors (Note 1)	1235250
Cash paid to suppliers (Note 2)	-664000
Cash paid for exp (note 3)	-360000
Cash generated from operations	211250
Less: Income tax paid	-43000
Net cash flow from Operating Activity	168250

Note 1:

Cash receipts from customers
Opening Recvbls	50000
Add: Sales	1255250
Less: Closing Recvbls	-70000
Less: Op Prov for bad debts	0
Add: Cl Prov for bad debts	0
	1235250

Note 2:

Cash paid to suppliers
COGS	712000
Less: Dep Included	0
Less: Patent w/off	0
Add: Closing stock	210000
Less: Op stock	-250000
Credit purchases	672000
Add: Op Creditors	115000
Less: Cl Creditors	-123000
	664000

Note 3:

Cash paid for exp
Opening Outstanding (Salary/P +Interest/P	97000
Closing Pre paid	9000
Exp in P/L
Salary	252100
Other exp	8150
Interest	75000
Less: Cl Outstanding	-74250
Less: op Pre paid	-7000
	360000

a) 2nd part:

Cash flow Statement (Indirect Method)
A. Cash flow from operations
Net Income (After tax)	140000
Adjustments:
Depreciation	25000
Patent written off (174000-153000)	0
Change in Inventory	40000
Change in Receivables (365-450)	-20000
Change in Pre paid exp	-2000
Change in Accounts payable	8000
Change in Accrual Liab	-22750
cash flow from Operating Activity		168250

b) 1st part:

B Investing activity
Putchase of equipment only cash paid portion	-40000	-40000

For plant 90000 we paid 40000 in cash and 50000 (5000 shares * 10) in stock which is a non cash item. It won't come anywhere in cash flow statement.

b) 2nd part:

C Financing Activity
Decrease in long term debt	-30000
Div Paid (note 4)	-115000
Eq share issued in cash (4000*10)	40000
Cash flow from Fin Act	-105000

Note 4:

Retained Earnings
Opening	120000
Add: Income CY	140000
Less:Closing	-145000
Less: Bonus issue	0
Div Paid	115000

Question #4 (30 marks) Consider the following financial statements about DANIEL Co. for the current year 2015 $1,255,250 (712,000) 543,250 1/S for the year ended Dec. 31, 2015 Sales CGS GM Expenses: Salaries Other expenses Depreciation Interest I $252, 100 8,150 25,000 75,000 360 250 Earnings before taxes Income tax Net Income 183,000 (43,000) $ 140,000 Comparative B/S for December 2015 and 2014 2015 2014 Balance sheets Assets Current assets Cash A/R Inv Prepaid Expenses $ 43,250 70,000 210,000 9,000 $ 20,000 50,000 250,000 7,000 Noncurrent assets Plant assests Less:Acc. Dep 600,000 (150,000) 510,000 (125,000) Totals $ 782,250 $ 712,000 1 Liabilities and Equity Current Liabilities A/P Salaries/P Interest/P $123,000 47,250 27,000 $115,000 72,000 25,000 70,000 100,000 Noncurrent Liabilities Bond/Payable Equity Common Stock, $10 par R/E 370,000 145,000 280,000 120,000 Totals $ 782,250 $ 712,000 Additional information concerning Daniel's transactions during the year ended December 31, 2015: All sales during the year were made on account. All inventory was purchased on account, comprising the total accounts payable account Plant assets costing $90,000 were purchased by paying $40,000 in cash and by using 5,000 shares of stock. The other expenses are related to prepaid items. I All income taxes incurred during the year were paid during the year. In order to supplement its cash, Daniel issued 4,000 shares of common stock at par value. There were no penalties assessed for the retirement of bonds. Cash dividends of $?? were declared and paid at the end of the fiscal year. YOU ARE GOING TO PREPARE CASH FLOW STATEMENTS Required: a. Prepare CFO using the (1) DIRECT(6 marks) and (ii) INDIRECT(5 marks) methods b. Compute CFF(5 marks) and CFI (2 marks). c. Compute FCF using the adjustment formula FCF =CFO-CFI. Hint; tax rate is 43/183 = 0.23497 (don't approximate) (6 marks) d. Compute FCF using the formula FCF = NOPAT - ANOA, excluding cash from operating assets. Hint; tax rate is 43/183 = 0.23497 (don't approximate) (6 marks)