Cash Flow - Techniques in financial accounting PDF

Preview

Summary

Techniques in financial accounting...

Description

Unseen In-Class Question (Module 9)

Statement of Cash Flows for a company

The simplified financial statements of Titanium Ltd appear below.

Additional information 1. Dividends declared and paid were $26 400. 2. During the year equipment was sold for $10 200 cash. The equipment cost $21 600 and had a carrying amount of $10 200 at the time of sale. 3. Depreciation expense is included as a selling expense in the income statement. 4. All sales and purchases are on credit. Required: Prepare a statement of cash flows using the direct method. TITANIUM LTD

Statement TITANIUM LTD Statement of Cash Flows for the year ended 30 June 2018

Cash flows from operating activities: Cash receipts from customers

$280 800

Cash paid to suppliers and employees

(245 400)

Cash generated from operations

35 400

Interest paid

(1 200)

Income taxes paid

(1 200) $33 000

Net cash from operating activities

Cash flows from investing activities: Sale of plant and equipment Purchase of plant and equipment

10 200 (43 200) (33 000)

Net cash used in investing activities

Cash flows from financing activities: Proceeds from loans Dividends paid

4 800 (26 400)

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

of Cash Flows Workings:

Cash receipts from customers 2020 accounts receivable balance + sales in income statement – 2021 account receivable balance

(21 600)

(21 600) 37 200 $15 600

Accounts Receivable Balance b/d

33 600

Sales

264 000

Cash from customers Balance c/d

280 800 16 800 297 600

297 600

Cash paid to suppliers Cost of goods sold income statement + 2021 inventory – 2020 inventory Cash payments for purchases Inventory Balance b/d

30 000

Purchases

228 000

Cost of Goods sold Balance c/d

216 000 42 000 258 000

258 000

2020 accounts payable + purchases – interest expense total Accounts Payable Cash paid

232 800

Balance c/d

27 600

Balance b/d Purchases

32 400 228 000 260 400

260 400 Cash paid to suppliers and employees = $232 800 (inventory) + $16 800 (selling expense) + $9 600 (administrative expense) -$13 800 (depreciation) = $245 400

Current tax liability 2020 + income tax expense from income statement – interest expense (income statement) Income tax paid

Current Tax Liability Cash paid

1 200

Balance b/d

6 000

Balance c/d

9 600 10 800

Income tax expense

4 800 10 800

for the year ended 30 June 2018...