The comparative, unclassified statement of financial position for Summerville Ltd. shows the following balances at December 31:

Question:

The comparative, unclassified statement of financial position for Summerville Ltd. shows the following balances at December 31:
The comparative, unclassified statement of financial position for Summerville Ltd.

Additional information for 2018:
1. Net income was $89,000.
2. A gain of $7,000 was recorded on the disposal of a small parcel of land. No land was purchased during the year.
3. A gain on disposal of $78,000 was recorded when an old building was sold for $90,000 cash. A new building was purchased for $564,000 and depreciation expense on buildings for the year was $55,000.
4. Equipment costing $140,000 was purchased while a loss of $10,000 was recorded on equipment that was sold for $15,000. The equipment that was sold late in the year had accumulated depreciation of $5,000.
5. The company took out $300,000 of new bank loans during the year.
6. Dividends were declared during the year.
7. Common shares were bought back by the company for $26,000, which was the amount at which they were originally issued, and additional shares were issued during the year.
Instructions
(a) Prepare the statement of cash flows using the indirect approach.
(b) Did the company manage its noncash working capital effectively?
(c) How could the company afford to buy a new building?

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Related Book For  book-img-for-question

Financial Accounting Tools for Business Decision Making

ISBN: 978-1119368458

7th Canadian edition

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine

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