Help with Simple Cash Flow Statement?

Question

I am so stuck on this. How do I report the accounts receivable, payable, and the interest in a simple cash flow statement.

Please see the problem below.

Construct a simple cash flow statement, a balance sheet, and an income statement for XYZ Corporation after 12 months of operations, assuming the following details:

• A paid-in capital of $200,000

• Monthly revenue of $150,000

• Cost of goods at $50,000 per month

• Overhead of $60,000 per month

• An average A/R of 60 days (2 months)

• Average A/P of 30 days (1 month), with a one-time $300,000 investment in plant and equipment financed by a $250,000 12-year promissory note with 10% interest and $50,000 non-interest bearing promissory note payable in 2 years

Answer 1

The question has too many parts, so for now I'll just do the simple income statement and balance sheet.

Income statement

Sales $1,800,000

less COGS ($600,000)

Gross profit $1,200,000

less:

Overheads ($720,000)

Interest ($25,000)

Net income $455,000

Balance sheet

Non-current assets

Plant & equipment $300,000

Current assets

Cash $465,000

AR $300,000

Sub-total $765,000

Total assets $1,065,000

Non-current liabilities

Promissory notes $300,000

Current liabilities

AP $110,000

Total liabilities $410,000

Shareholders' equity

Share capital $200,000

Retained Earnings $455,000

Sub-total $655,000

Total liabilities and

shareholders' equity $1,065,000

Note : No depreciation has been charged as we're not told the useful life of the equipment.

It was also assumed that the cheque for the year's interest of $25,000 was sent out on the last day of the year.