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 | 4,000 |
| Cost of sales | (2,400) |
| Gross Profit | 1,600 |
| Distribution costs | (320) |
| Administrative expenses | (160) |
| Investment income | 260 |
| Finance cost | (130) |
| Profit before tax | 1,250 |
| Taxation | (50) |
| Profit for the year | 1,200 |
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 | 648 | 540 |
| Receivable | 4,008 | 2,263 |
| Cash in hand | 60 | 30 |
| Total current assets | 4,716 | 2,833 |
| Total Assets | 4,764 | 2,865 |
| 31.12.2014 | 31.12.2013 | |
| EQUITY | ||
| Share Capital ($1 ordinary shares) | 1,000 | 900 |
| Share Premium account | 95 | 75 |
| Revaluation surplus | 77 | 70 |
| Retained Earnings | 2,800 | 1,600 |
| Non-Current 6 % Loan note | 720 | 120 |
| Current liabilities | ||
| Trade payables | 30 | 20 |
| Bank overdraft | 42 | 30 |
| Taxation | 0 | 50 |
| Total equity & liabilities | 4,764 | 2,865 |
Additional information
1. During the year ended 31 December 2014, the company sold a piece of equipment for $100, 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 $100. $100 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 + 7 - 100 + 10 -30 =48
Purchase = 129 out flow, investing activities.
3. Cash and Cash equivalents for year 2013 = Cash in hand - Bank overdraft
= $30 -$ 30
=0
Cash and Cash equivalents for year 2014 = Cash in hand -Bank overdraft
$ 60 - $42
= $18
N STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2014
| Net cash flows from operating activities | ||
| Profit before tax | 1,250 | |
| Depreciation charge | 30 | |
| Investment Income | (260) | |
| Finance cost | 130 | |
| Profit on sale of non-current asset | (10) | |
| inventories | (108) | |
| Receivables | (1,745) | |
| Payables | 10 | |
| Cash generated from operating activities | (703) | |
| investment income | 260 | |
| Finance cost | (130) | Tax paid | (100) |
| Net Cash flow from operating activities | (673) | |
| Cash flows from investing activities | ||
| Payment to acquire plant | (129) | |
| Receipts from sale of plant | 100 | |
| Net cash flows from investing activities | (29 ) | |
| Cash flows from financing activities | ||
| Issue of share capital | 120 | |
| Long-term loan | 600 | |
| Net cash flows from financing | 720 | |
| Increase in cash and cash equivalents | 18 | |
| Cash and cash equivalents at 1.1.2014 | 0 | |
| Cash and cash equivalents at 31.12.2014 | 18 |
To do the same topic again in ACCA F3 prepare cash flows statement