Question

WALLIS CORPORATION Statement of Financial Position As at December 31, 2014 Assets 2014 2013 Cash $88,600...

WALLIS CORPORATION
Statement of Financial Position
As at December 31, 2014
Assets 2014 2013
Cash $88,600 $49,100
Accounts receivable 85,000 59,400
Prepaid insurance 70,000 60,000
   Total current assets 243,600 168,500
Property, equipment and vehicles 360,000 305,000
Accumulated depreciation -110,400 -105,900
   Total non-current assets 249,600 199,100
Total Assets $493,200 $367,600
Liabilities and Shareholders' Equity
Accounts payable $21,500 $18,600
Wages Payable 3,000 4,000
   Total current liabilities 24,500 22,600
Bank loan payable 50,000 60,000
   Total liabilities 74,500 82,600
Common Shares 200,000 200,000
Retained Earnings 218,700 85,000
Total Shareholders’ Equity 418,700 285,000
Total Liabilities & Shareholders' Equity $493,200 $367,600
WALLIS CORPORATION
Income Statement
For the Year Ended December 31, 2014
Moving revenue $450,000
Gain on Sale of Equipment 5,000
   Total revenues $455,000
Expenses:
Depreciation expense 59,500
Wage expense 134,000
Vehicle maintenance expense 102,400
Interest expense 5,400 301,300
Net income $153,700

Additional data:

      (1) Vehicles originally costing $65,000 were sold for $15,000.

      (2) Dividends were paid during the year.

1.A. Using the Indirect method, compute the adjustments to Net Income prior to the non-cash working capital adjustments.

(Note: an amount in brackets indicates a negative amount) The Wallis Corporation provides moving services to local clients and reported the following data for 2014:

a. $208,200

b. $213,200

c. $89,200

d. $210,200

1.B. Cash Flow from (or used by) Operating Activities for Wallis Corporation is?

a. (147,800)

b. $182,300

c. $165,900

d. $174,500

1.C. Cash collected from customers is:

a. $489,500

b. $450,000

c. $407,600

d, $424,400

1.D. Cash paid for wages is:

a. $135, 000

b. $3,000

c. $133,000

d, $134,000

Homework Answers

Answer #1

1.A.($)

Net Income 153,700
Add: Depreciation 59,500
Less: Gains on sales of equipment (5000)
Cash from Operating activities before working capital adjustment 208,200

Option A is correct.

1.(B)

Cash Flow from operating activities
Before changes to working capital as above 208,200
Changes in current Assets except Cash (59400+60000)-(85000+70000) -35,600
Changes in current liabilities (24500-22600) +1900
Cash flow from operating activities 174,500

Hence Option D is correct.

1(C):

Cash collected from Accounts Receivable => Opening Balance + credit sales - Closing Balance

So, 59400+450,000-85000 = $ 424,400.

Hence Option D is correct.

1(D)

Wages paid = Opening + current year expense - closing

Ie, 4000+134000-3000 =$ 135,000

So, Option A is correct  

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