70.2K

Verified Solution

Link Copied!

ME19 (9 Marks)

Turbo Ltd. is preparing its interim financial statements for the end of its first quarter. Because of the cost and impracticalities of doing a physical count of the inventory, Turbo has decided not to do one. The company has decided to use the gross profit method to estimate the inventory at the end of the quarter. The following information is available from the first-quarter records:

Details Amount

Sales $2,456,000

Purchase returns and allowances $53,500

Sales discounts $23,500

Purchase discounts $120,000

Sales returns and allowances $235,000

Delivery expenses $87,500

Purchases $1,225,000

Freight-in $98,000

Beginning inventory $345,000

Over the past several years, Turbo has had a consistent gross profit percentage of 45%. Required:

Using the gross profit method, estimate Ion's ending inventory for the first quarter.

ME20 (14 Marks)

You have been provided with the following information, which has been prepared in accordance with IFRSs

WhiteRose Inc Statement of comprehensive income For the year ended December 31, 2020

Revenue $2,530

Cost of goods sold (1,679)

Gross profit 851

Distribution costs (62)

Depreciation expense (167)

Loss on disposal of equipment (14)

Administrative expenses (76)

Operating income 532

Interest expense (180)

Income before income tax expense 352

Income tax expense (183)

Net income $ 169

WhiteRose Inc Statements of financial position As at December 31

2020 2019

Assets Current assets

Cash and cash equivalents $ 197 $ 209

Accounts receivable $164 $ 189

Inventory $106 $ 102

$467 $ 500

Non-current assets

Land $1,500 $1,120

PP&E, net $693 $404

Total assets $$2,660 $2,024

Liabilities

Current liabilities

Accounts payable $71 $ 78

Income taxes payable $83 $ 74

$154 $152

Non-current liabilities

Bonds $1,000 $850

Total liabilities $1,154 $1,002

Shareholders' equity

Share capital $878 $800

Contributed surplus $80 $80

Accumulated other $380

comprehensive income

Retained earnings $168 $142

$1,506 $1,022

Total liabilities and

shareholders' equity $2,660 $2,024

1. Non-current assets property, plant and equipment had the following transactions: i) During the year, a piece of equipment that had originally cost $120,000 and had a net book value of $24 was sold. ii) Land was revalued at $1,500 on January 1, 2020.

2. The company paid dividends of $143 during the year.

3. Assume all bonds were issued at par.

4. WhiteRoses reports interest expense and interest revenue as an operating activity, while dividends paid are reported as a financing activity

5. WhiteRoses has proposed to issue equity shares once approved by board of directors. # of equity shares would be 124,000 having a value of $25 per share.

Required:

Prepare the cash flow from operating activities, Investing and Financing sections of the statement of cash flows using the direct method

Answer & Explanation Solved by verified expert

See Answer