The following financial data were given to you by Sophia Gadfly Company
Sophia Gadfly Company
Comparative Trial Balances
At Beginning and End of Fiscal Year
Ended January 31, 2020 Feb 1, 2019 Increase Decrease Jan 31, 2020
Debits
Cash $ 5,000 $14,400 $ 19,400
A/R 9,500 4,000 13,500
Inventory 30,000 $ 900 29,100
Prepaid insurance 1,200 450 750
LT-investments 12,000 2,000 10,000
Plant and equipment 28,500 12,500 41,000
CGS 53,900
Other expenses 32,200
Loss on disposal of equipment 100
Total S86,200 $199,950

Credits
Accumulated depreciation $ 5,000 1,900 $ 6,900
A/P 8,000 500 7,500
ST-NP 0 5,000 5,000

Accrued liability 2,500 2,800 5,300
Unearned revenue 1,000 750 250
LT-NP 30,000 6,000 24,000
C/S 20,000 10,000 30,000
Additional Paid-In Capital 500 11,100 11,600
R/E 19,200 800 18,400
Sales 85,000
Gain on disposal of investments 6,000
Total S86,200 $199,950

The following additional information was available:
i. All purchases and sales were on account.
ii. Equipment with an original cost of $1,500 was sold for $700.
iii. Other expenses included the following:

Insurance expired $ 450
Depreciation expense 2,600
Interest expense 1,800

iv. All dividends declared were paid in cash.
v. New equipment was acquired; cash, and a six-month note payable in the amount of
$5,000 were issued.
vi. LT-NP requires the payment of $6,000 per year plus interest until paid.
Hints:
Don’t forget accumulated depreciation in calculating NOA.
You must first calculate NI.

Required:
a. Prepare the statement of cash flows using the INDIRECT method for 2020. 

b. How much cash was disbursed for other expenses? Now prepare CFO using the DIRECT method for 2020.
c. Calculate the change in NOA, assuming 50% of cash is considered an operating asset.
It is helpful to use the following table:
2020 2019
OA
OL
NOA
Calculate the change in NOA.

Answer rating: 100% (QA)

Sophia Gadfly Company Cash Flow Statement for the year ended January 31 2020 using the indirect method Particulars Amount Amount Cash Flow from Operating Activities Profit before Tax WN 1 4800 Adjustm... View the full answer