MGT101 - Financial Accounting - I - Lecture Handout 42

User Rating:  / 0
PoorBest 

CASH FLOW STATEMENT (Continued)

Question # 1

You are given the Balance Sheet of ABC Limited as at June 30, 2001 and June 30, 2002 and its Profit and Loss Account for the year ended June 30 2002.

Required

You are required to prepare Cash Flow Statement for the given period.

ABC Ltd
Balance Sheet As At June 30 2002

2002 Rs. 2001 Rs.
Rs. ‘000 Rs. ‘000
Building at Cost
181,000 140,000
Accumulated Depreciation
36,000 30,000
Written Down Value
145,000 110,000
Plant and Machinery cost
83,000 90,000
Accumulated Depreciation
36,000 35,000
Written Down Value
47,000 55,000
Total Fixed Assets at WDV
192,000 165,000
Long Term Investment
17,000 10,000
Current Assets
Debtors
30,000 21,000
Stock
25,000 40,000
Short Term Deposits
18,000 15,000
Cash and Bank
30,000 24,000
103,000 100,000

Current Liabilities
Creditors

15,000 12,000
Proposed Dividend
18,000 16,000
Tax Payable
9,000 8,000
42,000 36,000
Working Capital
61,000 64,000
Net Assets Employed
270,000 239,000

Financed By
Share Capital

180,000 160,000
Share Premium Account
17,000 12,000
General Reserve
23,000 20,000
Accumulated Profit and Loss
34,000 27,000
Share Holders’ Equity
254,000 219,000
Term Finance Certificates
16,000 20,000
Total
270,000 239,000

ABC Ltd
Profit and Loss Account For the Year Ended June 30 2002
Rs. ‘000

 

Sales
Cost of Sales
Gross Profit
Other Income


Less: Administrative Expenses
Director’s Remuneration
Depreciation on Building
Loss on Sale of Machinery
Other Administrative Expenses

Less: Selling Expenses
Less: Mark up on TFC

Profit for the Year Before Tax
Provision for tax
Profit after tax
Acc. Profit Brought Forward

Appropriation
Transfer to Reserve
Proposed Dividend

Accumulated Profit Carried Forward

300,000
(231,000)
69,000
4,000
73,000

 

4,000
6,000
2,000
12,000
24,000
10,000
2,000
36,000
37,000
9,000
28,000
27,000
55,000

3,000
18,000
21,000
34,000

Additional Information

  1. Other income include dividend on Long Term Investment
  2. Cost of goods sold includes depreciation for the year on machinery Rs. 5,000.
  3. Accumulated Depreciation on the machine disposed off amounts to Rs. 4,000.

Solution

ABC Ltd
Cash Flow Statement For the Year Ended June 30 2002

Note
Rs. ‘000
Net Profit Before Tax
37,000
Adjustment of Non Cash Items
Depreciation
11,000
Loss on Sale of Machinery
2,000
Markup on TFC
2,000
52,000
Less: Other Income
(4,000)
Operating Profit Before Working
Capital Changes
48,000
Working Capital Changes
Reduction in Stock
15,000
Increase in Creditors
3,000
Increase in Debtors
(9,000)
9,000
Cash Flow from Operations
57,000
Markup on TFC Paid
(2,000)
Tax Paid 1
(8,000)
Net Cash Flow From Operating Activities
47,000
Cash Flow From Investing Activities
Dividend Received
4,000
Payment to Acquire Investments 2
(7,000)
Purchase of Fixed Assets (Building) 3
(41,000)
Receipt from Sale of Assets 4
1,000
Net Cash Flow From Investing Activities
(43,000)
Cash Flow From Financing Activities
Issue of Ordinary Shares
20,000
Share Premium Account
5,000
Dividend Paid 5
(16,000)
Repayment of TFC 6
(4,000)
Net Cash Flow From Financing Activities
5,000
Net Increase / (Decrease) in Cash and
Cash Equivalents During The Year
9,000
O/B of Cash and Cash Equivalents
39,000
C/B of Cash and Cash Equivalents
48,000

Note # 1 Tax Paid

Provision for Tax Account Code --------
Particulars Amount
Dr. (Rs.)
Particulars Amount
Cr. (Rs.)
Cash
Balance c/f
8,000
9,000
Bal. B/F
For the year
8,000
9,000
Total 17,000 Total 17,000

Note # 2 Payments to Acquire Investments

Investment Account Code --------
Particulars Amount
Dr. (Rs.)
Particulars Amount
Cr. (Rs.)
Bal. B/F
Cash
10,000
7,000
Bal. C/F 17,000
Total 17,000 Total 17,000

Note # 3 Purchases of Fixed Assets

Building Cost Account Code --------
Particulars Amount
Dr. (Rs.)
Particulars Amount
Cr. (Rs.)
Bal. B/F
Cash
140,000
41,000
Bal. C/F 181,000
Total 181,000 Total 181,000

Note # 4 Sale Proceed of Machinery

Machinery at Cost Account Code --------
Particulars Amount
Dr. (Rs.)
Particulars Amount
Cr. (Rs.)
Bal. B/F 90,000 Disposal A/c
Bal. C/F
7,000
83,000
Total 90,000 Total 90,000

 

Disposal of asset Account Code --------
Particulars Amount
Dr. (Rs.)
Particulars Amount
Cr. (Rs.)
Cost 7,000 Accumulated Dep.
Loss on Sale
Sale Proceed
4,000
2,000
1,000
Total 7,000 Total 7,000

Note # 5 Dividend Payable

Dividend Payable Account Code -------

Particulars Amount
Dr. (Rs.)
Particulars Amount
Cr. (Rs.)
Cash
C/B
16,000
18,000
O/B
For the Year
16,000
18,000
Total 34,000 Total 34,000

Note # 6 Repayment of TFC

TFC Account Account Code --------
Particulars Amount
Dr. (Rs.)
Particulars Amount
Cr. (Rs.)
Cash
C/B
4,000
16,000
O/B 20,000
Total 20,000 Total 20,000

Related Content: MGT101 - VU Lectures, Handouts, PPT Slides, Assignments, Quizzes, Papers & Books of Financial Accounting