Preparation of Statement of Cash Flows (Format Provided)

question 62

Essay

Preparation of statement of cash flows (format provided)
Comparative statements of financial position for Burgundy Bay Ltd. are shown below: Burgandy adheres to ASPE. Additional information concerning transactions and events during 2020:
1. Net income was $ 80,000.
2. Sold the long-term investments for $ 28,000.
3. Paid cash dividends of $ 34,000.
4. Purchased machinery costing $ 26,500, paid cash.
5. Purchased machinery by signing a $ 60,000 long-term note payable.
6. Extinguished a $ 40,000 long-term note payable by issuing common shares.
Instructions
Using the format provided on the next page, prepare a statement of cash flows (indirect method) for calendar 2020 for Burgundy Bay Ltd.

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Definitions:

Administrative Expenses

Costs related to the general operation of a business that are not directly linked to production or sales, such as salaries of office staff and utilities.

Cash Disbursements

The payments a company makes during a period, including expenses, debt payments, and purchase of assets.

Manufacturing Overhead

Indirect factory-related costs that are incurred when producing a product, including costs associated with maintenance, utilities, and quality control.

Fixed Selling Expenses

Fixed selling expenses are those costs associated with selling a product that do not change with the level of production or sales, such as salary of sales staff and rent for office space.