Mesflo Enterprise, Income Statement For the Year Ended 31st December, 2020 $442 500 Sales Cost...
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Mesflo Enterprise, Income Statement For the Year Ended 31st December, 2020 $442 500 Sales Cost of goods sold Operating expenses Interest expense Income tax expense Depreciation expense $225 000 162 000 5250 11 250 18 000 Loss on sale of a plant asset Gain on retirement of debt Net Income (421 500) (4 500) 12 000 28 500 Additional Information 1. All sales were on credit 2. All purchases were on credit 3. Plant assets that cost $52 500 were purchased for $7 500 and issuing $45 000 of bonds payable to the seller 4. Plant assets with an original cost of $22 500 and accumulated depreciation of $9 000 were sold for $9 000 cash. The result was a loss of $4 500. 5. The proceeds from issuing 2 250 ordinary shares were $11 250. 6. The $12 000 gain on retirement of bonds resulted from paying $13 500 to retire bonds that had a book value of $25 500. 7. Cash dividends of $10 500 were declared and paid. Required: 1. Prepare a statement of cash flows that reports the cash inflows and outflows from operating activities according to the direct method. (20 marks) 2. Show the reconciliation of net income to cash provided by operating activities. (10 marks)
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