Question

Question 4   
Lunar Company (Pty) Ltd‘s balance sheets for the last two years are provided below
Balance Sheets                                      2013                            2012
Cash                                                R 82,000                      R 40,000
Accounts Receivable                           180,000                       150,000
Inventory    170,000                        200,000
Equipment                                         200,000                        140,000
Accum. Depreciation                           (72,000)                       (60,000)
Total Assets                                     R560,000                     R470,000
Accounts Payable                             R100,000                     R 80,000
L/T Notes Payable                               100,000                        50,000
Ordinary Shares                                  250,000                       250,000

Retained Earnings                               110,000                         90,000
Total Liabilities &
Shareholders’ Equity                         R560,000    R470,000

The company’s income statement for 2013 is provided below:

Income Statement                              2013
Sales                                          R345,000
Expenses:
Cost of Goods Sold    R120,000
Operating
Expenses                                       58,000
Depreciation
Expense                                        20,000
Interest Expense                              2,000

                                                 200,000
Operating Income                         145,000
Gain on Sale--
Equipment*                                     5,000
Income before Taxes                    150,000
Tax Expense                                 30,000
Net Income                               R120,000

*The company sold equipment for R57, 000 that had a cost of R60, 000

Required:
Prepare the company’s Statement of Cash flows for 2013. Use the direct method of
computing cash flows from operating activities.

Answer 1