Reference no: EM13502447

Bulls Ltd. has a December 31 fiscal year-end, and the controller of the company is currently completing the financial statements of the company in order to present them at the next board meeting. He completed most of the work, but did not get around to finishing the cash flow statement. He gives you the following financial information in order for you to help him with the preparation of the cash flows.

Balance sheet

	2010	2009
Cash	£ 38,500	£ 8,000
Accounts receivable, net	20,000	29,500
Merchandise inventory	37,000	38,000
Prepaid Insurance	9,500	15,000
Land	54,500	40,600
Equipment, at cost	104,500	90,700
Less: Accumulated amortisation	(30,500)	(15,500)
Patent	49,000	53,200
Total assets	£ 282,500	£ 259,500
Accounts payable	£ 58,500	£ 42,000
Income taxes payable	16,500	11,500
Advertising payable	5,000
Dividends payable	40,000	10,000
Notes payable	40,000	83,000
Share capital	93,000	78,500
Retained earnings	29,500	34,500
Total liabilities and shareholders' equity	£ 282,500	£ 259,500

Sales	£ 1,090,000
Cost of goods sold	672,000
Gross profit	418,000
Operating expense
Salaries expense	195,000
Advertising expense	35,000
Rent expense	67,500
Insurance expense	34,500
Amortisation expense	25,000
Total operating expenses	357,000
Income from operations	61,000
Interest expense	2,500
Gain on sale of equipment	7,500
Income before income taxes	66,000
Income tax expense	4,000
Net income	£ 62,000

Additional information:

1. Bulls Ltd. purchased equipment of £36,300 in cash during the year.

2. Bulls Ltd. sold equipment for cash during the year.

3. No patent has been purchased nor sold in the year.

4. Accounts payable relates solely to transactions with suppliers for inventory.

Complete the following:

1. Prepare a complete cash flow statement using the indirect method for the 2010 fiscal year.

2. Compute the following amounts:

1. Cash collected from clients during the year

2.Cash paid for advertising expense

3. Cash paid to suppliers for inventory