Cash flow statement questions

1 The following information relates to Zen Enterprises

Income statement for the period to 31/12/09

£’000

Sales 30,650
– Cost of sales (26,000) (A)
Gross Profit 4,650
– Depreciation (450)
– Admin & selling expenses (910)
– Interest expense (400) (B)
+ dividend income 500
– Foreign exchange loss on invest. (40)
Net profit before tax 3,350
– Taxes (120)
Net profit after tax 3,230
Balance sheet for year ended 31/12/09

31/12/09
£ 000 31/12/08
£ 000 Note
Property plant & equipment cost 3730 1910 A
– depreciation 1450 2280 1060 850
Portfolio Investments 2500 2400
Current assets
Inventory 1000 1950
AR 1820 1200
Dividend receivable 80 –
Cash 410 260
Total assets 8090 6660
Current Liabilities
AP 250 1890
Interest payable 230 100 B
Taxes payable 400 1000

Long term debt 2300 1040
Paid in capital – Common stocks 1880 1630
Retained earnings 3030 1000
Total equity and liabilities 8090 6660
Notes

A. The PP&E acquired was paid for by £900,000 from the proceeds of a new long-term loan and also from cash.
Plant with an original cost of £80,000 and accumulated depreciation of £60,000 was sold for £20,000.
B. Dividends paid were £1,200,000.
Required.

A. What is the format for calculating the indirect method of cash flow from operating activities?

B. What is the required format of the complete cash flow statement?

C. What items are required to calculate the cash flow from investing activities?

D. What items are required to calculate the cash flow from financing activities?

E. Prepare the statement of cash flows

F. How would your answer differ if you were given the following information with regard to Trade receivables:
05
£ 000 04
£ 000
AR 1820 1200
Less Allowance for uncollectible accounts (80) (60)
Net receivables 1740 1140

In addition, you are told that trade receivables worth of 50,000 were written off during the year as bad debts.

G. How would your answer differ if you were told that investments that had a cost of £200,000 were sold for
£250,000 during the year?

 

 

 

2. Below are the Balance Sheet and Income Statement of Ruby Red Ltd.

Income statement for the year ended 31 December 2007

Note (£ ‘000) (£’000)
Sales 115,246
Opening inventory 15,891
Purchases 75,465
Closing inventory (12,235)
Cost of sales (79,121)
Gross profit 36,125
Selling & admin expenses 1 (16,020)
Dividend received 720
Interest expense (160)
Profit before tax 20,665
Tax (8,027)
Profit after tax 12,638

Balance Sheet as at 31 December

Note 2006 2007

Non-current assets
Intangible 1 22,500 20,000
Land 3 20,000 30,000
Property plant & equipment 1 18,250 21,500
Investments _7,150 _15,720
67,900 87,220
Current assets
Inventories 15,891 12,235
AR 9,102 11,450

Cash _____- __4,050
Total Assets 24,993
92,893 _27,735
114,955
Shareholders equity
Paid in capital CS 4 20,000 32,500
Capital reserves 15,000 20,000
Retained earnings 37,105 43,713
72,105 96,213
Long term liabilities
Loans 5,100 —

5,100 —-
Short term liabilities
Trade payables 3,426 3,724
Loans 5,000 3,500
Tax payable 5,292 7,498
Bank Overdraft
Dividends payable 1,970
—— —
4,020
Total equity and liabilities 15,688
92,893 18,742
114,955

Notes:

1. Selling and admin expenses include impairment of intangible assets of £ 2,500 , depreciation of property,
plant and equipment of £4,500 and profit on sale of property of £ 1,015 This property had a net book value at
date of sale of £ 2,260.

2. Interim dividends of £ 2,010 have been paid and a final dividend of £ 4,020 declared.

3. One-half of the increase in land is due to revaluation of existing land and the rest of the increase in
due to a purchase of new land.
4. 5,000 common shares of £1.00 par value were issued for £2.50 each.
Required:

Prepare the cash flow statement for Ruby Red Ltd for the year to 31 December 2007 using the

3:

An extract from the statement of comprehensive income of Trieste Ltd for the year to 31 May 2010 is shown below,
together with the company’s statement of financial position at that date (with comparatives for the previous year)

Statement of comprehensive income (extract) for the year to 31 May 2010

Profit before taxation 205,600
Taxation (46,980)
Profit after tax 158,620
Statement of financial position as at 31 May 2010

2010
£ 2009
£
Assets
Non- current assets
Property, plant and equipment 285,000 183,000
Accumulated Depreciation (151,650) (95,160)
133,350 87,840
Investments 12,000 10,000

Current assets
Inventories 171,220 133,330
AR 121,630 86,500
Cash at bank 9,710 –
Total Assets 447,910 317,670

Equity
Paid in capital – CS 150,000 150,000
Retained earnings 128,610 39,990

Liabilities
Non-current liabilities
11% long term loan 30,000 –
Current liabilities
NP owing re PPE 4,000
AP 89,370 61,530
Tax payable 45,930 42,660
Bank overdraft – 23,490
Total equity and liabilities 447,910 317,670

 

Notes:

1- The 11% long term loan was issued on 1 December 2009. The first half year’s interest was paid on 31 May
2010. Interest on bank overdraft paid during the year was £ 1,320.
2- Dividends received during the year were £ 930. Dividends totalling £ 70,000 were paid during the year.
3- Plant which had cost of £ 22,000 was sold in March 2010 for £ 7,000. The accumulated depreciation on this
plant at the time of disposal was £ 16,230. No investments were sold during the year.

Required:

Prepare the cash flow statement for this company for the year to 31 May 2010 using the indirect method.

 

 

4)

Explain the effect (if any) of each of the following transactions on an entity’s profit or loss and on its cash
flows

a- the purchase of new equipment which is then depreciated over its useful life
b- the payment of cash on account
c- accounting for an accrued expense at the end of an accounting period
d- the payment of a dividend
e- the purchase of inventory for cash
f- investing spare cash in high interest bank account repayable at 7 days’ notice
g- stock dividends

 

ORDER THIS ESSAY HERE NOW AND GET A DISCOUNT !!!

 

You can place an order similar to this with us. You are assured of an authentic custom paper delivered within the given deadline besides our 24/7 customer support all through.

 

[order_calculator]