Reference no: EM131700307

1. CTUK LLC is a retail company. Use the information below to prepare the company's statement of cash flows for the year ended 12/31/2016 using:

(i) SFAS No. 95

(ii) The flexibility within IAS 7, to produce a relevant and faithfully representative classification of the retail entity's operating, investing and operating cash flows.

CTUK LLC Balance sheets at December 31
		2015	2016
		$	$
Assets	Notes
Cash		4,200	25,000
Inventory		4,000	23,000
Interest receivable		800	-
Accounts receivable (net)		40,000	74,000
Total current assets		49,000	122,000
Property, plant and equipment (net)	1	108,000	78,925
Lease property rights (capital lease)		31,700	23,775
Total assets		188,700	224,700
Liabilities
Accounts payable		53,000	70,000
Denture loan interest payable		2,000	-
Debenture bonds payable (net)	2	49,500	49,600
Capital lease liability		31,700	24,870
Total liabilities		136,200	144,470
Equity
Common stock		50,000	60,000
Retained earnings		2,500	20,230
Total equity		52,500	80,230
Total liabilities and owners' equity		188,700	224,700

 

Note 1	2015	2016
	$	$
Property, plant and equipment (gross)	180,000	160,000
Less accumulated depreciation	(72,000)	(81,075)
Property, plant and equipment (net)	108,000	78,925

 

Note 2	2015	2016
	$	$
Debenture bonds payable (8%)	50,000	50,000
Less unamortized discount	(500)	(400)
Debenture bonds payable, net	49,500	49,600

 

CTUK LLC: Income statement for year ended December 31, 2016
	$
Revenue	150,000
Operating expenses
Cost of goods sold	(44,000)
Depreciation	(25,000)
Admin and selling salaries	(42,000)
Operating income	39,000
Other income and finance costs
Dividends received	2,200
Interest income	1,000
Interest expense	(7,270)
Gain on disposal of fixed asset	4,000
Total other income and finance costs	(70)
Income before income taxes	38,930
Income tax expense @ 40%	(15,572)
Net income	23,358

The following additional information is made available:

• The leased property rights and liability relate to a four year lease signed on December 31, 2015. Annual lease payments are $10,000. The first payment was due on December 31, 2016. The effective interest rate implicit in the lease is 10%. The leased property has a fair value of $31,700 and is depreciated on a straight line basis over four years.
• Total depreciation of $25,000 was charged during 2016, including $17,075 on property, plant and equipment (i.e. non-leased assets), and $7,925 on leased property rights.
• A property with a historic cost of $20,000 was sold during 2016, which resulted in a gain on disposal of $4,000 (hint: to find the cash received from this disposal you need to find the property's net book value).
• The 8% 5 year debenture bonds were sold at a discount on December 31, 2015 for $49,500. Straight line amortization is to be used on this discount.
• The interest expense of $7,270 for 2016 includes: $3,170 of interest on the capital lease, $4,000 of debenture loan interest and $100 of bond discount amortization.
• The interest receivable and debenture interest payable in the 2015 balance sheet were caused by checks being delayed in the post. Assume the tax implications of these amounts were dealt with during 2015.
• $2,200 of dividend income was received during 2016.

Dividends of $5,628 were declared and paid to stockholders during 2016.