Reference no: EM132458680

Problem - Cash Flow Statement

The following information relates to Blackwolf Ltd.:

Blackwolf Ltd. Comparative Balance Sheet As At 30 June 2010 and 2009
	2010 $	2009 $
Cash	25,000	19,000
Account receivable	176,000	82,000
Inventory	117,000	64,000
Buildings	31,000	51,000
Acc. depreciation - buildings	(15,000)	(15,000)
Equipment	30,000	55,000
Acc. depreciation - equipment	(5,000)	(16,000)
Total assets	359,000	240,000
Accounts payable	107,000	62,000
Accrued expenses	5,000	6,000
Interest payable	5,000	2,000
Income tax payable	10,000	4,000
Short-term loan	3,000	5,000
Share capital	98,000	88,000
Retained profit	131,000	73,000
Total liabilities & shareholders' equity	359,000	240,000

Additional information during the year:

ALL sales and expenses are on credit.

A building with original cost of $20,000 and accumulated depreciation of $5,000 was saold cash for a price of $20,000.

A piece of equipment with an original cost of $25,000 and accumulated depreciation of $15,000 was sold cash for a price of $5,000.

Blackwolf Ltd had a net profit of $67,000 this year.

Required -

1. Using the indirect method prepare the reconciliation of Net Profit for Cash flows from Operations.

2. Indicate which Blackwolf's stage of life-cycle and what evidence you use to support this selection.