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 (30)
Profit for the year 875

N STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

31.12.2014 31.12.2013
NON-CURRENT ASSETS
Cost 120 80
Acc Depreciation (72) (48)
Carrying Value 48 32
Current Assets
Inventory 864 720
Receivable 3,038 1,448
Cash in hand 20 10
Total current assets 3,922 2,178
Total Assets 3,970 2,210
31.12.2014 31.12.2013
EQUITY
Share Capital ($1 ordinary shares) 500 200
Share Premium account 150 90
Revaluation surplus 22 20
Retained Earnings 2,475 1,600
Non-Current 6 % Loan note 540 90
Current liabilities
Trade payables 105 70
Bank overdraft 168 120
Taxation 10 20
Total equity & liabilities 3,970 2,210

Additional information

1. During the year ended 31 December 2014, the company sold a piece of equipment for $80, realising a profit of $10. There were no other disposals of non-current assets during the year.

2. Depreciation of $30 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 $80. $80 inflow, investing activities. The profit of $10 is to be deducted from operating activities. (Disposal cost will be $).

2. Depreciation of $30 will be added to operating activities. We can derive the purchase as follows:

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

32 + purchase + 2 - 80 + 10 -30 =48

Purchase = 114 out flow, investing activities.

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

= $10 -$ 120

=-110

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

$ 20 - $168

= $-148

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

Net cash flows from operating activities
Profit before tax 905
Depreciation charge 30
Investment Income (130)
Finance cost 65
Profit on sale of non-current asset (10)
inventories (144)
Receivables (1,590)
Payables 35
Cash generated from operating activities (839)
investment income 130
Finance cost (65)
Tax paid (40)
Net Cash flow from operating activities (814)
Cash flows from investing activities
Payment to acquire plant (114)
Receipts from sale of plant 80
Net cash flows from investing activities (34 )
Cash flows from financing activities
Issue of share capital 360
Long-term loan 450
Net cash flows from financing 810
Increase in cash and cash equivalents -38
Cash and cash equivalents at 1.1.2014 -110
Cash and cash equivalents at 31.12.2014 -148

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

To do another topic in ACCA F3