The Following Information Is Produced on an Accrual Basis and Relates

question 44

Essay

The following information is produced on an accrual basis and relates to Emily's Superior Photo Framers.
Statement of comprehensive income for the year ended 31 December 2015
$\begin{array}{lr}\text { Income } & &\$ 80,880 \\\text { Less Photo framing supplies used } && {14,500}\\&&{66,380}\\\text { Less Other Expenses }\\\text { Advertising } & \$ 250 \\\text { Salaries } & 18,250 \\\text { Vehicle expenses } & 5,300 \\\text { Office expenses } & 3,500 \\\text { Rent of premises } & 20,000 \\\text { Interest expenses } & 2,000 \\\text { Depreciation of equipment } & 3,600&52,900\\\text { Profit }&&\$13,480\end{array}$
$\text { Statement of financial position as at } 31 \text { December } 2015$
$\begin{array}{lrl}&2014&2015\\\text { Current Assets }&\$&\$\\\text { Cash at bark } & 20,500 & 4,030 \\\text { Accounts receivable } & 1,500 & 1,650 \\\text { Stock of photo framing supplies } & 5,500 & 3,500\\&27,500&9,180\\\text { Fixed Assets }\\\text { Thoto Framing Equipment } & 55,700 & & 65,000 & \\\text { Less Accumulated Depreciation } & 11,200 & 44,500 & 14,800 & 50,200\\&&\$72,000&&\$59,380\end{array}$
$\begin{array}{llr}\text { Current Liakritities }\\\text { Creditor owed for vehicle expenses }&-&1,900\\\text { Long Term Liabilities }\\\text { Loan Finance Co, repayable by } 2012&18,000&15,000\\&18,000 &16,900\\\text { Equity } & \\\text { Capital - Emily } & 34,000 & 34,000 \\\text { Current account Emily } & \underline{20,000} & \underline{8,480}\\&\underline{54,000} & \underline{42,480}\\&\$ 72,000& \$ 59,380\end{array}$
Additional Information:
• Emily withdrew $25,000 through the year for her own use.
• No photo framing equipment was sold during the year.
REQUIRED:
a)Prepare a classified statement of cash flows for the year ended 31 December 2015 from the above information.Show all workings.
b)Prepare a statement reconciling profit with cash flow from operating activities.
c)Comment on what the statement of cash flows reveals about the cash situation of Emily's Superior Photo Framers.

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