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 8,000
Cost of sales (6,000)
Gross Profit 2,000
Distribution costs (400)
Administrative expenses (500)
1,100
Interest received 220
Interest paid (440)
Profit before tax 880
Taxation (176)
Profit for the period 704

SHABNUM CO

STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER

31.12.20X2 31.12.20X1
NON-CURRENT ASSETS
Plant 192 128
Intangible assets 30 20
Investments 90
Current Assets
Inventory 324 270
Receivable 2,411 469
Short tem investments 40
Cash in hand 20 10
Total 3,017 987
31.12.20X2 31.12.20X1
EQUITY
Share Capital ($1 ordinary shares) 1,500 600
Share Premium account 285 105
Revaluation reserve 22 20
Retained Earnings 630 7
Non-Current Loan 270 45
Current liabilities
Trade payables 120 80
Bank overdraft 84 60
Taxation 106 70
Total 3,017 987

The following information is available.

(a) The proceeds of the sale of non-current asset investments amounted to $100.

(b) Fixtures and fittings, with an original cost of $40 and a net book value of $ 16 , were sold for $12.8 during the year.

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

31.12.20X2 31.12.20X1
Cost 480 320
Accumulated Depreciation 288 192
Net Book Value 192 128

(d) 900 $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 $100. $100 inflow, investing activities. The profit of $10 is to be deducted from operating activities.

(b) Fixtures and fittings, with an original cost of $40 and a net book value of $ 16 , were sold for $12.8 during the year. Sales proceed $12.8. Inflow, investing activities. The loss of $3.2 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 480 320
Accumulated Depreciation 288 192
Net Book Value 192 128

Plant ob + purchase + revaluation -disposal = Plant cb

320 + purchase + 2 - 40 =480

Purchase = 198 out flow, investing activities.

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

192 + depreciation of the year -24 = 288

Depreciation of the year = 288 -192 +24

=120 inflow, operating activities.

(d) 900 $1 ordinary shares were issued during the year at a premium of 20c per share. $1,080 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

= $10 -$ 60

=-50

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

$40 +$ 20 - $84

= $-24

SHABNUM CO

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

Net cash flows from operating activities
Profit before tax 880
Depreciation charge 120
interest received (220)
Interst paid 440
Loss on sale of plant 3.2
Profit on sale of non-current asset investments (10)
inventories (54)
Receivables (1942)
Payables 40
Cash generated from operating activities -742.8
interest received 220
Interest paid (440)
Dividend paid (81)
Tax paid (140)
Net Cash flow from operating activities -1183.8
Cash flows from investing activities
Payment to acquire plant (198)
payment to acquire intangible non-current assets (10)
Receipts from sale of plant 12.8
Receipts from sale of non-current investment 100
Net cash flows from investing activities -95.2
Cash flows from financing activities
Issure of share capital 1080
Long-term loan 225
Net cash flows from financing 1305
Increase in cash and cash equivalents 26
Cash and cash equivalents at 1.1. X2 -50
Cash and cash equivalents at 31.12.X2 -24

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

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