Comparative partial balance sheet
|
Income statement
|
Details
|
2019
|
2020
|
Sales
|
250,000
|
cash
|
48,000
|
54,000
|
Deduct: cost of goods sold
|
(100,000)
|
Account Receivable
|
68,000
|
60,000
|
Gross Profit
|
150,000
|
Inventory
|
112,000
|
110,000
|
Deduct: Administrative and selling expenses (including 15,000 dinars depreciation of equipment)
|
(68,000)
|
Prepaid Expenses
|
8,000
|
10,000
|
Long-term Investment
|
60,000
|
62,000
|
Income from operations
|
82,000
|
equipment
|
127,000
|
181,000
|
Gains from equipment sales are added
|
7,000
|
loan bonds
|
30,000
|
27,000
|
Deduct: Interest Expense
|
(9,000)
|
Account Payable
|
87,000
|
75,000
|
net income before tax
|
80,000
|
checks
|
8,000
|
12,000
|
Subtract: income tax (20%)
|
(16,000)
|
Income tax payable
|
9,000
|
8,000
|
net income
|
64000
|
additional information:
1- Accounts receivable relate to sales, creditors’ accounts relate to the cost of goods sold, prepaid expenses relate to administrative and selling expenses, and the total depreciation of property and equipment is (15,000) dinars.
2- The Manama Company had sold equipment costing (17,500) dinars and its depreciation complex (12,000) dinars for (12,500) dinars, and interest banks for this year at 5% for a long-term loan amounting to (180,000) dinars.
Required:
First: Use your specialized skills to apply accounting principles. Help the management of Al-Manama Trading Company in preparing the statement of cash flows according to the direct method, explaining to it how to extract the amounts.
Second: The direct method for preparing the statement of cash flows differs from the indirect method. Required: Using your critical skill in solving problems related to measurement, recognition, and disclosure of elements of financial statements. Compare only the differences between the methods of preparing the statement of cash flows.
Third: The cash flow statement provides businessmen with the opportunity to assess the profitability of the company. Required: Using your critical skill in showing insight and interpretation in solving problems, evaluate the profitability of Al-Manama Trading Company and its ability to meet its obligations to investors and creditors according to what is reflected in the company's cash flow statement and compare it with the industry standard of profitability, which is (98%).