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 2,000
Cost of sales (1,200)
Gross Profit 800
Distribution costs (160)
Administrative expenses (80)
Investment income 390
Finance cost (195)
Profit before tax 755
Taxation (10)
Profit for the year 745

N STATEMENTS OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

31.12.2014 31.12.2013
NON-CURRENT ASSETS
Cost 960 640
Acc Depreciation (576) (384)
Carrying Value 384 256
Current Assets
Inventory 108 90
Receivable 3,993 2,534
Cash in hand 180 90
Total current assets 4,281 2,714
Total Assets 4,665 2,970
31.12.2014 31.12.2013
EQUITY
Share Capital ($1 ordinary shares) 1,500 900
Share Premium account 135 15
Revaluation surplus 11 10
Retained Earnings 2,545 1,800
Non-Current 6 % Loan note 180 30
Current liabilities
Trade payables 105 70
Bank overdraft 189 135
Taxation 0 10
Total equity & liabilities 4,665 2,970

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 $240 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 $240 will be added to operating activities. We can derive the purchase as follows:

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

256 + purchase + 1 - 140 + 10 -240 =384

Purchase = 497 out flow, investing activities.

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

= $90 -$ 135

=-45

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

$ 180 - $189

= $-9

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

Net cash flows from operating activities
Profit before tax 755
Depreciation charge 240
Investment Income (390)
Finance cost 195
Profit on sale of non-current asset (10)
inventories (18)
Receivables (1,459)
Payables 35
Cash generated from operating activities (652)
investment income 390
Finance cost (195)
Tax paid (20)
Net Cash flow from operating activities (477)
Cash flows from investing activities
Payment to acquire plant (497)
Receipts from sale of plant 140
Net cash flows from investing activities (357 )
Cash flows from financing activities
Issue of share capital 720
Long-term loan 150
Net cash flows from financing 870
Increase in cash and cash equivalents 36
Cash and cash equivalents at 1.1.2014 -45
Cash and cash equivalents at 31.12.2014 -9

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

To do another topic in ACCA F3