Class Exercises Cash Flow direct method so+lutions PDF

Preview

Summary

Download Class Exercises Cash Flow direct method so+lutions PDF

Description

Exercise 18.2

Conversion from accrual-basis items to cash basis

The information below was taken from the general ledger accounts of Muhria Tran, who uses the accrual basis of accounting. MUHRIA TRAN

Accounts receivable Inventory Prepaid insurance Accounts payable Wages payable Sales Cost of sales Expenses (including $47 000 depreciation)

30 June 2018 $115 800 48 360 2 200 35 500 3 200 270 000 148 000 88 000

2017 $78 600 52 200 2 700 37 700 4 700

Required A. Calculate the amount of cash collected from customers during 2018. B. Calculate the amount of cash paid to suppliers for purchases during 2018. C. Calculate the amount of cash paid to suppliers of services (including employees) during 2018. A. Receipts from customers = $232 800 =

Begin. accounts Sales + receivable – $270 000 + $78 600 –

Ending accounts receivable $115 800

B. Payments to Begin. suppliers Cost of Begin. Ending Accounts of goods = sales – inventory + inventory + Payable – $146 360 = $148 – $52 200 + $48 360 + $37 700 – 000

Ending accounts payable $35 500

C. Payments Begin. for accrued services = Expenses + expenses – $42 000 = *$41 000 + $4 700 – * ($88 000 – $47 000)

Ending Begin. Ending accrued Prepaid Prepaid expenses – Expenses + Expenses $3 200 – $2 700 + $2 200

Exercise 18.7

Statement of cash flows and GST

The business owned by Xavier Long made the following cash transactions during the reporting period. GST of 10% was applicable on all transactions. 1. Purchased equipment for $22 000 (including GST). 2. Purchased inventory for $44 000 (including GST). 3. Sold inventory for $110 000 (including GST). 4. Purchased office supplies for $8800 (including GST). 5. Sold an item of plant for $66 000 (including GST). 6. A net amount of $9000, representing GST payable and receivable, excluding the above transactions, was paid to the Australian Taxation Office. Required Prepare a statement of cash flows using the direct method for the business for the period. Treat all GST items as part of operating activities. XAVIER LONG Statement of Cash Flows (Extract) for the year ended XXXX Cash flows from operating activities: Cash receipts from customers Cash paid to suppliers*** Net cash from operating activities Cash flows from investing activities: Purchase of property, plant and equipment* Sale of property, plant and equipment** Net cash from investing activities

$110 000 (69 800) $40 200

(20 000) 60 000 40 000

Note: As required by Interpretation 1031, cash receipts from customers is shown at a gross figure, whereas cash flows from investing activities is shown at net of GST. The GST on investing activities is included in operating activities. Workings: * Purchase of equipment is shown net of GST. Purchase price before GST = $22 000 – ($22 000 / 11) = $20 000 (GST = $2 000). ** Selling price before GST = $66 000 – ($66 000 / 11) = $60 000 (GST = $6 000). *** Cash paid to suppliers = cash purchases of current assets including GST + additions to GST Receivable account in the current period (from investing activities) + GST paid to the ATO = $44 000 + $8 800 + ($2 000 + $6 000) + $9 000 = $69 800

Exercise 18.12

Statement of cash flows for sole trader

Comparative statements of financial position as at 31 December 2017 and 2016 and the income statement for 2017 for W. Yu are set out below. W. YU Comparative Statements of Financial Position as at 31 December 2017 ASSETS Cash on hand and at bank Accounts receivable Inventory Plant and equipment Accumulated depreciation – plant and equipment

LIABILITIES AND EQUITY Accounts payable Expenses payable Long-term loan payable W. Yu, Capital

$111 600 161 400 196 200 408 000 (180 000)

2016

$697 200

$134 400 151 200 208 800 300 000 (162 000 ) $632 400

$140 400 77 400 60 000 419 400 $697 200

$132 600 83 400 — 416400 $632 400

W. YU Income Statement for the year ended 31 December 2017 Sales Less: Cost of sales GROSS PROFIT Less: Expenses (Including depreciation) PROFIT

$592 200 350 000 242 200 209 200 $ 33 000

No plant and equipment was sold during the year. W. Yu withdrew $30 000 in cash during the year. Required Prepare a statement of cash flows for the year ended 31 December 2017 in accordance with the direct method. W. YU Statement of Cash Flows for the year ended 31 December 2017 Cash flows from operating activities: Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Net cash from operating activities

$582 000 (526 800) $55 200

Cash flows from investing activities: Purchase of property, plant and equipment Net cash used in investing activities Cash flows from financing activities: Long-term borrowings Drawings Net cash from financing activities

(108 000) (108 000) 60 000 (30 000)

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

30 000 (22 800) 134 400 $111 600

Workings: Cash receipts from customers Accounts Receivable 151 200 Cash from customers 592 200 Balance c/d 743 400

582 000 161 400 743 400

Balance b/d Purchases

Inventory 208 800 Cost of Goods sold 337 400 Balance c/d 546 200

350 000 196 200 546 200

Cash paid Balance c/d

Accounts Payable 329 600 Balance b/d 140 400 Purchases 470 000

132 600 337 400 470 000

Cash paid Balance c/d

Expenses Payable 197 200 Balance b/d 77 400 Expenses* 274 600

83 400 191 200 274 600

Balance b/d Sales

Cash paid to suppliers Cash payments for purchases

*Expenses = $209 200 – $18 000 (depreciation) = $191 200 Cash paid to suppliers and employees = $329 600 (inventory) + $197 200 (expenses) = $526 800...