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Prepare a classified statement of financial position in good form (no monetary amounts are necessary)
the following accounts at the end of the current year:
Garfield Corp.
Statement of Financial Position
As at July 31, 2020
Cash $69,000 Notes and accounts payable $44,000
Accounts receivable
(net) 40,500 Long-term liabilities 75,000
Inventory 60,000 Shareholders' equity 155,500
Equipment (net) 84,000
Patents (net) 21,000
$274,500 $274,500
1. Cash includes $1,200 in a petty cash fund and $12,000 in a bond sinking fund.
2. The net accounts receivable balance is composed of the following three items: (a) accounts receivable debit balances $52
accounts receivable credit balances $8,000; and (c) allowance for doubtful accounts $3,500.
3. Inventory costing $5,300 was shipped out on consignment on July 31, 2020. The ending inventory balance does not includ
consigned goods. Receivables of $5,300 were recognized on these consigned goods.
4. Equipment had a cost of $112,000 and an accumulated depreciation balance of $28,000.
5. Income tax payable of $9,000 was accrued on July 31. Garfield Corp., however, had set up a cash fund to meet this obliga
cash fund was not included in the cash balance, but was offset against the income tax payable account.
6. Long-term liabilities are bonds payable issued at par, due in 2025.
7. Shareholders' equity is made up of two account balances: Common Shares of $105,000 and Retained Earnings of $50,500
Instructions
Use the information available to prepare a corrected classified statement of financial position as at July 31, 2020. (Adjust the a
d Corp. has prepared the following
n as at July 31, 2020. (Adjust the account balances based on the additional information.)
E5.17 (LO 8, 9) (Preparation of Statement of Cash Flows) The comparative statement of financial position of Dropafix Inc. as at
June 30, 2020, and a statement of comprehensive income for the 2020 fiscal year follow:
Dropafix Inc.
Statement of Financial Position
30-Jun-20
30-Jun
Assets 2020 2019
Cash $20,000 $ 38,000 -18000
Accounts receivable 86,000 74,000 12,000
Inventory 103,000 102,000 1000
Prepaid expenses 2,000 6,000 -4000
FV-OCI investments 47,000 45,000 2000
Equipment 173,000 159,000 14000
Accumulated depreciation—equipment (35,000) (25,000) -10000
Total $396,000 $399,000
Additional information:
1. Dropafix follows IFRS. Assume that interest is treated as an operating activity for purposes of the statement of cash flows
2. Operating expenses include $10,000 in depreciation expense.
3. There were no disposals of equipment during the year.
4. Common shares were issued for cash.
5. During the year, Dropafix acquired $8,000 of equipment in exchange for long-term notes payable.
Instructions
a. Prepare the statement of cash flows for Dropafix for the year ended June 30, 2020, using the indirect method along with
b. Prepare the operating activities section of the statement of cash flows for Dropafix using the direct method.
al position of Dropafix Inc. as at
he direct method.
P5.13 P5-13 Martineau Inc., a major retailer of high-end office furniture, operates several stores and is a publicly traded comp
The company is currently preparing its statement of cash flows. The comparative statement of financial position and income
statement for Martineau as at May 31, 2020, are as follows:
Martineau Inc.
Statement of Financial Position
May 31, 2020, and May 31, 2019
2020 2019
Assets
Cash $33,250 $20,000
Accounts receivable 74,800 55,600
Inventory 188,700 199,000
Prepaid insurance 8,800 7,000
Total current assets 305,550 281,600
Plant assets 596,500 501,500
Less: Accumulated depreciation 148,000 122,000
Net plant assets 448,500 379,500
Total assets $754,050 $661,100
Liabilities and Shareholders' Equity
Accounts payable $123,000 $115,000
Salaries and wages payable 11,000 12,000
Interest payable 4,700 2,600
Total current liabilities 138,700 129,600
Mortgage payable 75,000 100,000
Total liabilities 213,700 229,600
Shareholders' equity
Common shares 405,750 360,000
Retained earnings 134,600 71,500
Total shareholders' equity 540,350 431,500
Total liabilities and shareholders' equity $754,050 $661,100
Martineau Inc.
Income Statement
For the Year Ended May 31, 2020
Sales $945,000
Cost of goods sold 414,000
Gross margin 531,000
Expenses
Salaries and wages expense 207,800
Other operating expenses 120,000
Depreciation expense 26,000
Total operating expenses 353,800
Operating income 177,200
Interest expense 26,700
Income before income tax 150,500
Income tax expense 55,400
Net earnings $95,100
The following is additional information about transactions during the year ended May 31, 2020 for Martineau Inc., which follo
IFRS.
1. Plant assets costing $95,000 were purchased by paying $64,000 in cash and issuing 5,000 common shares.
2. In order to supplement its cash, Martineau issued 4,000 additional common shares.
3. Cash dividends were declared and paid at the end of the fiscal year.
Instructions
a. Prepare a statement of cash flows for Martineau Inc. for the year ended May 31, 2020 using the direct method. Support t
statement with appropriate calculations, and provide all required disclosures.
b. Using the indirect method, calculate only the net cash flow from operating activities for Martineau Inc. for the year ended
31, 2020.
is a publicly traded company.
cial position and income
Martineau Inc., which follows