ACCA F3 Prepare Cash Flows Statement

Set out below are the financial statements of Shabnum Co. You are the financial controller, faced with the task of implementing IAS statement of Cash Flows.

SHABNUM CO

INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 20X2

Revenue 4,000
Cost of sales (3,000)
Gross Profit 1,000
Distribution costs (200)
Administrative expenses (250)
550
Interest received 110
Interest paid (220)
Profit before tax 440
Taxation (88)
Profit for the period 352

SHABNUM CO

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER

31.12.20X2 31.12.20X1
NON-CURRENT ASSETS
Plant 432 288
Intangible assets 270 180
Investments 50
Current Assets
Inventory 432 360
Receivable 795 268
Short tem investments 120
Cash in hand 40 20
Total 2,089 1,166
31.12.20X2 31.12.20X1
EQUITY
Share Capital ($1 ordinary shares) 1,300 900
Share Premium account 215 135
Revaluation reserve 33 30
Retained Earnings 277 6
Non-Current Loan 180 30
Current liabilities
Trade payables 15 10
Bank overdraft 21 15
Taxation 48 40
Total 2,089 1,166

The following information is available.

(a) The proceeds of the sale of non-current asset investments amounted to $60.

(b) Fixtures and fittings, with an original cost of $90 and a net book value of $ 36 , were sold for $28.8 during the year.

(c) the following information relates to property, plant and equipment.

31.12.20X2 31.12.20X1
Cost 1080 720
Accumulated Depreciation 648 432
Net Book Value 432 288

(d) 400 $1 ordinary shares were issued during the year at a premium of 20c per share.

(e) Dividends totalling $81 were paid during the year.

Required.

Prepare a statement of cash flows for the year to 31 December 20X2 using the format laid out in IAS 7.

 

Suggested Solutions

Working

(a) The proceeds of the sale of non-current asset investments amounted to $60. $60 inflow, investing activities. The profit of $10 is to be deducted from operating activities.

(b) Fixtures and fittings, with an original cost of $90 and a net book value of $ 36 , were sold for $28.8 during the year. Sales proceed $28.8. Inflow, investing activities. The loss of $7.2 is to be added back to operating act as inflow.

(c) the following information relates to property, plant and equipment.

31.12.20X2 31.12.20X1
Cost 1080 720
Accumulated Depreciation 648 432
Net Book Value 432 288

Plant ob + purchase + revaluation -disposal = Plant cb

720 + purchase + 3 - 90 =1080

Purchase = 447 out flow, investing activities.

Accumulated depreciation ob + depreciation of the year -depreciation of disposed asset =Accumulated depreciation cb.

432 + depreciation of the year -54 = 648

Depreciation of the year = 648 -432 +54

=270 inflow, operating activities.

(d) 400 $1 ordinary shares were issued during the year at a premium of 20c per share. $480 has been received. Inflow, financing activities.

(e) Dividends totalling $81 were paid during the year. $81 were paid . Outflow, operating activities

(f) Cash and Cash equivalents for year X1 = Cash in hand - Bank overdraft

= $20 -$ 15

=5

Cash and Cash equivalents for year X2 = Short term investment + Cash in hand -Bank overdraft

$120 +$ 40 - $21

= $139

SHABNUM CO

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 20X2

Net cash flows from operating activities
Profit before tax 440
Depreciation charge 270
interest received (110)
Interst paid 220
Loss on sale of plant 7.2
Profit on sale of non-current asset investments (10)
inventories (72)
Receivables (527)
Payables 5
Cash generated from operating activities 223.2
interest received 110
Interest paid (220)
Dividend paid (81)
Tax paid (80)
Net Cash flow from operating activities -47.8
Cash flows from investing activities
Payment to acquire plant (447)
payment to acquire intangible non-current assets (90)
Receipts from sale of plant 28.8
Receipts from sale of non-current investment 60
Net cash flows from investing activities -448.2
Cash flows from financing activities
Issure of share capital 480
Long-term loan 150
Net cash flows from financing 630
Increase in cash and cash equivalents 134
Cash and cash equivalents at 1.1. X2 5
Cash and cash equivalents at 31.12.X2 139

To do the same topic again in ACCA F3 prepare cash flows statement

To do another topic in ACCA F3