Prepare a properly formatted statement of cash flows

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Reference no: EM131807541

Problem -

ELMO Ltd Cash Flow Statement For the year ended 30 June 2012

Sources of Cash:

$

Sales of inventory

185,000

Sale of Ordinary shares in the company

210,000

Sale of Investments

40,000

Depreciation of Plant and Equipment

27,500

Issue of a Bill Payable for the purchase of a delivery vehicle

10,000

Interest on Investments

3,000

TOTAL SOURCES OF CASH:

475,500

Applications of Cash

 

Purchase of inventory

129,000

Operating expenses (including depreciation)

80,000

Purchase of Plant and Equipment

170,000

Purchase of Investments (details of sale above)

37,500

Purchase of delivery vehicle by issuing a Bill payable

10,000

Buyback of company shares

5,000

Interest on Bill Payable

1,500

TOTAL APPLICATIONS OF CASH

433,000

NET INCREASE IN CASH

$42,500

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.

Reference no: EM131807541

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