The comparative, unclassified statement of financial position for Sylvester Ltd. shows the following balances at December 31:
Question:
Additional information regarding 2018:
1. Net income was $57,000.
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 $38,000 was recorded when an old building was sold for $50,000 cash. A new building was purchased for $364,000 and depreciation expense on buildings for the year was $55,000.
4. Equipment costing $65,000 was purchased while a loss of $4,000 was recorded on equipment that was sold for $5,000. The equipment that was sold late in the year had accumulated depreciation of $11,000.
5. The company took out $210,000 of new bank loans during the year.
6. Dividends were declared and paid and no common shares were bought back by the company.
Instructions
(a) Prepare the statement of cash flows using the indirect method.
(b) Did the company manage its noncash working capital effectively?
(c) How could the company afford to buy a new building?
Step by Step Answer:
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