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 9,000
Cost of sales (6,750)
Gross Profit 2,250
Distribution costs (450)
Administrative expenses (562.5)
1,238
Interest received 247.5
Interest paid (495)
Profit before tax 990
Taxation (198)
Profit for the period 792

SHABNUM CO

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER

31.12.20X2 31.12.20X1
NON-CURRENT ASSETS
Plant 336 224
Intangible assets 60 40
Investments 10
Current Assets
Inventory 648 540
Receivable 1,450 122
Short tem investments 140
Cash in hand 120 60
Total 2,754 996
31.12.20X2 31.12.20X1
EQUITY
Share Capital ($1 ordinary shares) 1,300 700
Share Premium account 150 30
Revaluation reserve 88 80
Retained Earnings 744 6
Non-Current Loan 180 30
Current liabilities
Trade payables 60 40
Bank overdraft 84 60
Taxation 148 50
Total 2,754 996

The following information is available.

(a) The proceeds of the sale of non-current asset investments amounted to $20.

(b) Fixtures and fittings, with an original cost of $70 and a net book value of $ 28 , were sold for $22.4 during the year.

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

31.12.20X2 31.12.20X1
Cost 840 560
Accumulated Depreciation 504 336
Net Book Value 336 224

(d) 600 $1 ordinary shares were issued during the year at a premium of 20c per share.

(e) Dividends totalling $54 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 $20. $20 inflow, investing activities. The profit of $10 is to be deducted from operating activities.

(b) Fixtures and fittings, with an original cost of $70 and a net book value of $ 28 , were sold for $22.4 during the year. Sales proceed $22.4. Inflow, investing activities. The loss of $5.6 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 840 560
Accumulated Depreciation 504 336
Net Book Value 336 224

Plant ob + purchase + revaluation -disposal = Plant cb

560 + purchase + 8 - 70 =840

Purchase = 342 out flow, investing activities.

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

336 + depreciation of the year -42 = 504

Depreciation of the year = 504 -336 +42

=210 inflow, operating activities.

(d) 600 $1 ordinary shares were issued during the year at a premium of 20c per share. $720 has been received. Inflow, financing activities.

(e) Dividends totalling $54 were paid during the year. $54 were paid . Outflow, operating activities

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

= $60 -$ 60

=0

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

$140 +$ 120 - $84

= $176

SHABNUM CO

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

Net cash flows from operating activities
Profit before tax 990
Depreciation charge 210
interest received (247.5)
Interst paid 495
Loss on sale of plant 5.6
Profit on sale of non-current asset investments (10)
inventories (108)
Receivables (1328)
Payables 20
Cash generated from operating activities 27.1
interest received 247.5
Interest paid (495)
Dividend paid (54)
Tax paid (100)
Net Cash flow from operating activities -374.4
Cash flows from investing activities
Payment to acquire plant (342)
payment to acquire intangible non-current assets (20)
Receipts from sale of plant 22.4
Receipts from sale of non-current investment 20
Net cash flows from investing activities -319.6
Cash flows from financing activities
Issure of share capital 720
Long-term loan 150
Net cash flows from financing 870
Increase in cash and cash equivalents 176
Cash and cash equivalents at 1.1. X2 0
Cash and cash equivalents at 31.12.X2 176

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

To do another topic in ACCA F3