Prepare a statement of Cash Flows

You have been given the following information relating to a limited liability company called N. This company is preparing financial statements for the year ended 31 December 2014.

Statement of profit or loss for the year ended 31 December 2014

$
Revenue 3,000
Cost of sales (1,800)
Gross Profit 1,200
Distribution costs (240)
Administrative expenses (120)
Investment income 130
Finance cost (65)
Profit before tax 905
Taxation (80)
Profit for the year 825

N STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

31.12.2014 31.12.2013
NON-CURRENT ASSETS
Cost 600 400
Acc Depreciation (360) (240)
Carrying Value 240 160
Current Assets
Inventory 324 270
Receivable 2,591 805
Cash in hand 20 10
Total current assets 2,935 1,085
Total Assets 3,175 1,245
31.12.2014 31.12.2013
EQUITY
Share Capital ($1 ordinary shares) 1,400 700
Share Premium account 230 90
Revaluation surplus 99 90
Retained Earnings 1,025 200
Non-Current 6 % Loan note 360 60
Current liabilities
Trade payables 30 20
Bank overdraft 21 15
Taxation 10 70
Total equity & liabilities 3,175 1,245

Additional information

1. During the year ended 31 December 2014, the company sold a piece of equipment for $140, realising a profit of $10. There were no other disposals of non-current assets during the year.

2. Depreciation of $150 has been charged.

3. There were no amounts outstanding in respect of interest payable or receivable as at 31 December 2013 or 2014.

4. There were no dividends paid or declared during the year.

Required.

Prepare a statement of cash flows for N for the year ended 31 December 2014 in accordance with IAS 7 statement of cash flows.

Suggested Solutions

Working

1. The proceeds of a piece of equipmemt amounted to $140. $140 inflow, investing activities. The profit of $10 is to be deducted from operating activities. (Disposal cost will be $).

2. Depreciation of $150 will be added to operating activities. We can derive the purchase as follows:

Carrying ob + purchase + revaluation -disposal -depreciation expense = carrying cb

160 + purchase + 9 - 140 + 10 -150 =240

Purchase = 351 out flow, investing activities.

3. Cash and Cash equivalents for year 2013 = Cash in hand - Bank overdraft

= $10 -$ 15

=-5

Cash and Cash equivalents for year 2014 = Cash in hand -Bank overdraft

$ 20 - $21

= $-1

N STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2014

Net cash flows from operating activities
Profit before tax 905
Depreciation charge 150
Investment Income (130)
Finance cost 65
Profit on sale of non-current asset (10)
inventories (54)
Receivables (1,786)
Payables 10
Cash generated from operating activities (850)
investment income 130
Finance cost (65)
Tax paid (140)
Net Cash flow from operating activities (925)
Cash flows from investing activities
Payment to acquire plant (351)
Receipts from sale of plant 140
Net cash flows from investing activities (211 )
Cash flows from financing activities
Issue of share capital 840
Long-term loan 300
Net cash flows from financing 1,140
Increase in cash and cash equivalents 4
Cash and cash equivalents at 1.1.2014 -5
Cash and cash equivalents at 31.12.2014 -1

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

To do another topic in ACCA F3