Reference no: EM132546202
Condensed financial data of M3 Milk Ltd appear below:
M3 Milk LTD
Comparative Statement of financial positions
30 June 2019 2018
Assets
Cash $ 72,000 $ 35,000
Accounts receivable 85,000 53,000
Inventories 120,000 132,000
Prepaid expenses 19,000 25,000
Investments 90,000 75,000
Plant assets 310,000 250,000
Accumulated depreciation (65,000) (60,000)
Total $631,000 $510,000
Liabilities and Equity
Accounts payable $ 93,000 $ 75,000
Accrued expenses payable 29,000 24,000
Notes payable 130,000 160,000
Ordinary shares 245,000 170,000
Retained earnings 134,000 81,000
Total $631,000 $510,000
M3 Milk LTD
Statement of Profit or Loss
for the year ended 30th June 2019
Sales (all credit) $480,000
Less:
Cost of sales $290,000
Operating expenses (excluding depreciation) 60,000
Depreciation expense 17,000
Income tax expense 15,000
Interest expense 18,000
Loss on sale of plant assets 3,000 403,000
Profit after income tax $ 77,000
Additional information:
1. New plant assets were purchased for cash in 2019.
2. Old plant assets costing $25,000 were sold for cash. The carrying amount on the date of sale was $13,000.
3. Notes with a face value of $30,000 were converted into $30,000 of ordinary shares.
4. A cash dividend was declared and paid during the year.
5. Accounts payable pertain to merchandise purchases.
6. The Income tax was paid in cash during the period.
Question 1. create a statement of cash flows for the year ended 30th June 2019 using the direct method.
Question 2. Briefly explain what you would expect to see in the operating, investing and financing activities for a start-up business.