extra cash flow questions

8/3/2019 Extra Cash Flow Questions

1/8

Additional Cash Flow Statement Question 1

The financial statements of Alpha Limited are presented below;

Alpha Limited

Balance Sheets as at 31 December

2008 2009000 000

Current AssetsCash 240 715Accounts Receivable 700 495Provision for Doubtful Debts (100) (65)Inventory 510 610Prepaid Insurance 90 70

1,440 1,825

Non-Current AssetsLand 1,600 1,800Buildings 1,000 1,100Accumulated Depreciation - Buildings (500) (590)Plant and Equipment 400 400Accumulated Depreciation - Plant and Equipment (210) (260)Motor Vehicles 90 90Accumulated Depreciation - Motor Vehicles (50) (55)Goodwill 500 500

2,830 2,985

Total Assets 4,270 4,810

Current LiabilitiesAccounts Payable 800 800Interest Payable 50 -Final Dividend Payable 300 150Income Tax Payable 220 160

1,370 1,110Non-Current Liabilities

Bank Loan 400 800

Total Liabilities 1,770 1,910

NET ASSETS $2,500 $2,900

Shareholders' EquityShare Capital 1,800 2,150Revaluation Surplus 100 50Retained Profits 600 700

TOTAL SHAREHOLDERS'EQUITY $2,500 $2,900


2/8

Alpha Limited

Income Statement for the year ended 31 December 2009

000 000

Sales 6,400Less: Cost of Goods Sold 5,000Gross Profit 1,400Profit on Sale of Motor Vehicle 5

1,405Less: Expenses

Bad Debts Expense 60Depreciation Expense - Buildings 90Depreciation Expense - Plant and Equipment 50Depreciation Expense - Motor Vehicles 20

Interest Expense 180Other Expenses 565 965

Operating Profit before Income Tax 440Less: Income Tax Expense 160Operating Profit After Income Tax $280

Additional Information Land was the only asset revalued during the year. During the year, a bonus dividend of $150,000 was paid out of the Revaluation Surplus. The carrying amount (written down value) of the motor vehicle sold (as at the date of

sale) was $5,000.

Required:

i. Prepare a Cash Flow Statement (using the direct method) for AlphaLimited for the year ended 31 December 2009 in accordance withAASB107.

ii. Prepare a note reconciling the operating profit after income tax withnet cash flow from operating activities.


3/8


The financial statements of Cedar Limited are presented below;

Cedar Limited


2008 2009'000 '000

Current AssetsCash 175 Accounts Receivable 510 720Provision for Doubtful Debts (50) (55)Inventory 405 315Prepaid Insurance 30 15

1,070 995

Non-Current AssetsLand 1,800 2,250Buildings 700 700Accumulated Depreciation - Buildings (250) (290)Plant and Equipment 600 600Accumulated Depreciation - Plant and Equipment (185) (200)Motor Vehicles 300 300Accumulated Depreciation - Motor Vehicles (120) (150)

2,845 3,210


Current LiabilitiesBank Overdraft 25Accounts Payable 400 295Final Dividend Payable 150 190Provision for Income Tax 305 370Accrued Interest 15 20

870 900Non-Current Liabilities

Bank Loan 500 100


NET ASSETS $2,545 $3,205

Shareholders' EquityShare Capital 1,400 1,700Revaluation Surplus 100 200General Reserve 150 350Retained Profits 895 955



4/8

Cedar LimitedIncome Statement for the year ended 31 December 2009

'000 '000

Sales 6,450Less: Cost of Goods Sold 4,700Gross Profit 1,750Profit on sale of Plant and Equipment 5

1,755Less: Expenses

Bad Debts Expense 45Depreciation Expense - Buildings 40Depreciation Expense - Plant and Equipment 35

Depreciation Expense - Motor Vehicles 30Interest Expense 50Other Expenses 625 825


Additional Information

There were no bonus dividends paid during the year. The written down value of the plant and equipment sold was $10,000. Land was revalued during the year.

Required

i. Prepare a Statement of Cash Flows (using the direct method) forCedar Limited for the year ended 31 December 2009 in accordancewith AASB107.

ii. Prepare a note reconciling the operating profit after income taxwith net cash flow from operating activities.


5/8


The financial statements of Allcare Limited are presented below;

Allcare Limited


2008 2009'000 '000

Current AssetsCash 500Accounts Receivable 625 480Provision for Doubtful Debts (70) (90)Inventory 345 460Prepaid Insurance 40 50

940 1,400

Non-Current AssetsLand 2,000 2,350Buildings 900 900Accumulated Depreciation - Buildings (300) (365)Plant and Equipment 600 620Accumulated Depreciation - Plant and Equipment (200) (210)Motor Vehicles 400 400Accumulated Depreciation - Motor Vehicles (150) (190)

3,250 3,505


Current LiabilitiesBank Overdraft 130 Accounts Payable 300 320Final Dividend Payable 185 145Provision for Income Tax 255 350Accrued Interest 20 40

890 855Non-Current Liabilities

Bank Loan 400 265


NET ASSETS $2,900 $3,785

Shareholders' EquityShare Capital 1,350 1,800Revaluation Surplus 200 250General Reserve 150 150Retained Profits 1,200 1,585



6/8

Allcare LimitedIncome Statement for the year ended 31 December 2009

'000 '000

Sales 7,200Less: Cost of Goods Sold 5,200Gross Profit 2,000Proceeds from Sale of Equipment 10

2,010Less: Expenses

Bad Debts Expense 55Carrying Amount of Equipment Sold 15Depreciation Expense - Buildings 65

Depreciation Expense - Plant and Equipment 40Depreciation Expense - Motor Vehicles 40Insurance Expense 95Interest Expense 75Rent Expense 100Other Expenses 545 1,030



During the year, a $100,000 bonus dividend was paid out of the Revaluation Surplus. Land was the only asset revalued during the year.

Required

i. Prepare a Statement of Cash Flows (using the direct method) forAllcare Limited for the year ended 31 December 2009 inaccordance with AASB107.

ii. Prepare a note reconciling the operating profit after income taxwith net cash flow from operating activities.


7/8


The financial statements of Belgrave Limited are presented below;

Belgrave Limited

Balance Sheets as at 31 December('000s)

2008 2009Current AssetsCash 410 443Accounts Receivable 600 850Provision for Doubtful Debts (30) (50)Inventory 855 700Prepaid Insurance 100 100

1,935 2,034

Non-Current AssetsLand 1,980 2,330Plant and Equipment 1,600 2,410Accumulated Depreciation - Plant and Equipment (400) (430)Motor Vehicles 450 390Accumulated Depreciation - Motor Vehicles (70) (65)Furniture and Fittings 320 320Accumulated Depreciation - Furniture and Fittings (100) (120)

3,780 4,835


Current LiabilitiesAccounts Payable 670 890Salaries Payable 190 -Interest Payable 15 20Accrued Expenses 50 40Income Tax Payable 30 50Final Dividend Payable 60 70

1,015 1,070

Non-Current LiabilitiesBorrowings 900 1,260


NET ASSETS $3,800 $4,548

Shareholders Equity Share Capital 1,200 1,200Revaluation Surplus 500 650General Reserve 900 1,100Retained Profits 1,200 1,598



8/8

Belgrave Limited

Income Statement for the Year Ended 31 December 2009('000s)

Sales 3,150Less: Cost of Goods Sold 1,700Gross Profit 1,450Proceeds from Sale of Motor Vehicles 50

1,500

Less Expenses:Bad Debts Expense 40Insurance Expense 60Salaries Expense 310Interest Expense 35

Other Expenses 167Depreciation Expense Plant and Equipment 30Depreciation Expense Motor Vehicles 30Depreciation Expense Furniture and Fittings 20Carrying Amount of Motor Vehicle Sold 60

Total Expenses 752Profit Before Income Tax 748Less: Income Tax Expense 50Profit After Tax 698


Land was revalued upwards during the year by $150,000. Plant to the value of $450,000 was acquired during the year through an issue of a long

term note. The amount has been included in Borrowings.

There was an interim dividend paid during the year.

Required:(a) Prepare a Cash Flow Statement (using the direct method) for Belgrave Limited for the

year ended 31 December 2009 in accordance with AASB 107.

(b) Prepare a note reconciling the operating profit after tax with net cash flows fromoperating activities.

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