Problem -
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ELMO Ltd Cash Flow Statement For the year ended 30 June 2012
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Sources of Cash:
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$
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Sales of inventory
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185,000
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Sale of Ordinary shares in the company
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210,000
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Sale of Investments
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40,000
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Depreciation of Plant and Equipment
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27,500
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Issue of a Bill Payable for the purchase of a delivery vehicle
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10,000
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Interest on Investments
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3,000
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TOTAL SOURCES OF CASH:
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475,500
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Applications of Cash
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Purchase of inventory
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129,000
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Operating expenses (including depreciation)
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80,000
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Purchase of Plant and Equipment
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170,000
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Purchase of Investments (details of sale above)
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37,500
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Purchase of delivery vehicle by issuing a Bill payable
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10,000
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Buyback of company shares
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5,000
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Interest on Bill Payable
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1,500
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TOTAL APPLICATIONS OF CASH
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433,000
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NET INCREASE IN CASH
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$42,500
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Your colleague is excited with the results that are shown in this statement. However your tutor is not convinced that the statement has been prepared according to the instructions provided in the course text and the associated course materials. The class has been asked to look at it again and prepare a corrected version.
Required: Using the information provided, prepare a properly formatted statement of cash flows using the direct method. Note: The only non-cash items are the depreciation and the gain on sale of the investments. *The cash balance at the beginning of 2012 was given as being $70 000.