The comparative statement of financial positions and statementof profit or loss of Karvina Electronics...

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Accounting

The comparative statement of financial positions and statementof profit or loss of Karvina Electronics Limited are asfollows:
Karvina Electronics Limited
Statement of financial positions /Balance Sheets At 31 December2017
2017             2016
$               $
Assets:
Cash                                                                                     107,267         123,040
Accounts receivable                                                             32,180           29,400
Merchandise inventory                                                        383,125          61,710
Long-term investments                                                        55,900           56,400
Equipment                                                                            275,500         145,500
Accumulated depreciation                                                   (33,550)         (31,200)
Total assets                                                                           820,422         384,850
Liabilities:
Accounts payable                                                                 56,827           40,380
Income taxes payable                                                           10,725           10,200
Bonds payable                                                                     48,750           66,000
Total liabilities                                                                      116,302         116,580
Equity:
Ordinary shares                                                                    130,000         105,000
Retained earnings                                                                574,120         163,270
Total equity                                                                          704,120         268,270
Total liabilities and equity                                                   820,422         384,850
Karvina Electronic Limited
Statement of profit or loss and other comprehensive income
For Year Ended 31 December 2017
Sales                                                                                                             890,000
Cost of goods sold 180,900
Depreciation expense (equipment)                                       29,400
Other operating expenses                                                     48,000
Interest expense                                                                   2,000            (260,300)
Other gains (losses):
Loss on sale of equipment                                                                           (8,400)
Income before taxes                                                                                     621,300
Income taxes expense                                                                                  (27,650)
Net income                                                                                                   593,650
Additional information:
1 There was no gain or loss on the sales of the long-terminvestments, nor on the bonds retired.
2 Old equipment with an original cost of $37,550 was sold with aloss.
3 Additional ordinary shares were issued for cash.
Required:
a To prepare a statement of cash flows for the company for theyear ended 31 December 2017 using the direct method.(Reconciliation by indirect method is not required.)
b Briefly explain why the net income of the company was positivebut the cash flows of the company decreased in 2017.

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Please hit LIKE button if this helped For any further explanation please put your query in comment will get back to you Cash Flow Cash Received from Customers Working1 887220 Cash paid to vendors Working2 485868 Cash Paid for Income Tax Working3 27125 Payment of Operating Expense 48000 Payment of Interest 2000 Net Cash flow from Operating See Answer

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In: AccountingThe comparative statement of financial positions and statementof profit or loss of Karvina Electronics Limited...The comparative statement of financial positions and statementof profit or loss of Karvina Electronics Limited are asfollows:Karvina Electronics LimitedStatement of financial positions /Balance Sheets At 31 December20172017 2016 $ $Assets:Cash 107,267 123,040Accounts receivable 32,180 29,400Merchandise inventory 383,125 61,710Long-term investments 55,900 56,400Equipment 275,500 145,500Accumulated depreciation (33,550) (31,200)Total assets 820,422 384,850Liabilities:Accounts payable 56,827 40,380Income taxes payable 10,725 10,200Bonds payable 48,750 66,000Total liabilities 116,302 116,580Equity:Ordinary shares 130,000 105,000Retained earnings 574,120 163,270Total equity 704,120 268,270Total liabilities and equity 820,422 384,850Karvina Electronic LimitedStatement of profit or loss and other comprehensive incomeFor Year Ended 31 December 2017Sales 890,000Cost of goods sold 180,900Depreciation expense (equipment) 29,400Other operating expenses 48,000Interest expense 2,000 (260,300)Other gains (losses):Loss on sale of equipment (8,400)Income before taxes 621,300Income taxes expense (27,650)Net income 593,650Additional information:1 There was no gain or loss on the sales of the long-terminvestments, nor on the bonds retired.2 Old equipment with an original cost of $37,550 was sold with aloss.3 Additional ordinary shares were issued for cash.Required:a To prepare a statement of cash flows for the company for theyear ended 31 December 2017 using the direct method.(Reconciliation by indirect method is not required.)b Briefly explain why the net income of the company was positivebut the cash flows of the company decreased in 2017.