The Following Information Is Produced on an Accrual Basis and Relates

question 32

Essay

The following information is produced on an accrual basis and relates to Emily's Superior Photo Framers.
Statement of comprehensive mcome for the
year ended 31 December 2018 $\begin{array}{lll}\text { Income}&\$80,880\\\text { Less Photo framing supplies used}&14,500\\&66,380\end{array}$
Less Other Expenses
$\begin{array}{ll}\text { Advertising } & \$ 250 \\\text { Salaries } & 18250 \\\text { Vehicle expenses } & 5300 \\\text { Office expenses } & 3500 \\\text { Rent of premises } & 20000 \\\text { Interest expenses } & 2000 \\\text { Depreciation of equipment } & 3600&52,900\\\text { Profit }&&\$13,480\end{array}$ Statement of financial position as at 31 December 2018
$\begin{array}{lll}&2017&&2018\\\text { Cunrent Assets } & \$ && \$ \\\text { Cash at bank } & 20500 && 4030 \\\text { Accounts receivable } & 1500 && 1650 \\\text { Stock of photo framing supplies } & 5500 && 3500\\&27,500&&9,180\\\text { Fixed Assets } & \\\text { Photo Framing Equipment } & 55700 &&65,000\\\text { Less Accumulated Depreciation } & 11200&44,500&14,800&50,200\\&&\$72,000&&\$59,380\end{array}$ Current Liabilities
$$\begin{array} { l l } \text { Creditor owed for vehicle expenses } & - &1900\\\text { Long Term Liabilities } & \\\text { Loan Finance Co, repayable by 2020 } &18,000&15,000\\&18,000&16,900\end{array}$$ Equity
$\begin{array}{lll}\text { Capital - Emily } & 34,000 & 34,000 \\\text { Current account Emily } & \underline{20,000} & \underline{8,480} \\& 54,000 & 42,480\\&\$72,000&\$59,380\end{array}$ 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 2018 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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Definitions:

Improper Fraction

A fraction in which the top number is greater than or equal to the bottom number.

Mixed Fraction

A mathematical expression combining a whole number and a proper fraction.

Mixed Fraction

A number consisting of an integer and a proper fraction (e.g., 3 1/2).

Whole Number

Non-negative integers, including zero, without fractions or decimals, representing complete units.