REVIEW QUESTION 1

a)

Huntwell Ltd
Cash Flow Statement
for the year ended 30 June 2015

Cash flows from operating activities -

Cash receipts from customers 882,000
Cash paid to suppliers and employees (633,000)
Cash generated from operations 249,000
Interest paid (9,000)
Income taxes paid (60,000)
Net cash used in operating activities 180,000

Cash flows from investing activities -

Proceeds from sale of plant 20,000
Payment for plant and equipment (415,000)
Interest received 16,000
Dividends received 5,000
Net cash used in investing activities (374,000)

Cash flows from financing activities -

Proceeds of share issue 400,000
Dividends paid (55,000)
Net cash used in financing activities 345,000

Net increase in cash and cash equivalents 151,000

Cash and cash equivalents at the beginning of period 81,000

Cash and cash equivalents at the end of period 232,000

Workings:

Trade Debtors
Bal b/d 210,000 Bad debts w/off 4,000
Sales 920,000 Cash 882,000
. Bal c/d 244,000
1,130,000 1,130,000

Inventory
Bal b/d 285,000 Cost of sales 320,000
Purchases 370,000 Bal c/d 335,000
655,000 655,000

Trade Creditors
Cash 361,000 Bal b/d 90,000
Bal c/d 99,000 Purchases 370,000
460,000 460,000

Accrued Expenses - Wages & Salaries & Others

Cash 272,000 Bal b/d 5,000
Bal c/d 10,000 Expenses 277,000
282,000 282,000

Plant and Equipment

Bal b/d 1,760,000 Carrying amt of pt & eqt sold 60,000
Cash 415,000 Bal c/d 2,115,000
2,175,000 2,175,000

Accumulated Depreciation
Carrying amt of pt & eqt sold 30,000 Bal b/d 230,000
Bal c/d 295,000 Depreciation 95,000
325,000 325,000

Bad debts = 99,000 - 95,000 (depn) = 4,000

Supplier 361,000
Other expenses = 376,000 – (depn & bad debts) 99,000
+ (o/bal - wages & salaries) 5,000
– (c/bal - wages & salaries) 10,000 = 272,000
633,000

Interest Payable
Cash 9,000 Bal b/d 15,000
Bal c/d 20,000 Expense 14,000
29,000 29,000

Income taxes paid = (o/bal - CTL) 45,000 + (ITE) 74,000 – (c/bal – CTL) 65,000 + (o/bal –
DTL) 16,000 – (c/bal – DTL) 10,000 = 60,000

Interest Receivable
Bal b/d 20,000 Cash 16,000
Interest revenue 11,000 Bal c/d 15,000
31,000 31,000

For the calculation of dividend paid

Retained Earnings
General reserve 7,000 Bal b/d 125,000
Cash - interim dividend paid 25,000 P & L Summary 142,000
Final dividend payable 35,000
Bal c/d 200,000 .
267,000 267,000

Dividends paid = 25,000 (interim) plus 30,000 (final) = 55,000

REVIEW QUESTION 2

a)
Douglas Berry Ltd
Cash Flow Statement
for the year ended 30 June 2015

Cash flows from operating activities

Cash received from customers 6,504,000
Cash paid to suppliers and employees (5,924,500)
Cash generated from operations 579,500
Interest paid (69,500)
Income taxes paid (250,000)
Net cash used in operating activities 260,000

Cash flows from investing activities

Payment for building addition (600,000)
Payment for equipment (150,000)
Proceeds from sale of equipment 99,000
Proceeds from sale of investments 240,000
Dividends received 45,000
Net cash used in investing activities (366,000)

Cash flows from financing activities

Proceeds from issue of shares 240,000
Proceeds from issue of debentures 220,000
Repayment of borrowings – mortgage (30,000)
Dividends paid (195,000)
Net cash used in financing activities 235,000

Net increase in cash and cash equivalents 129,000

Cash and cash equivalents at beginning of period 124,000

Cash and cash equivalents at end of period 253,000

Workings:

Accounts Receivable / Bills Receivable

O/bal – A/cs receivable 208,000 Discount allowed 7,000
- Bills receivable 12,000 Allow. for doubtful debts – 12,000
bad debts w/off
Sales 6,580,00 Cash 6,504,000
0
C/bal – A/cs receivable 262,000
- Bills receivable 15,000
6,800,00 6,800,000
0

Allowance for Doubtful Debts

A/cs receivable – bad debts 12,000 O/bal 11,500

w/off
C/bal 14,500 Doubtful debts expense 15,000
26,500 26,500

Inventory / A/cs Payable / Bills Payable

O/bal – Inventory 477,600 O/bal – A/cs payable 448,000
Discount received 10,750 - Bills payable 9,600
Cash 3,513,75 Cost of sales 3,475,000
0
C/bal – A/cs payable 426,500 C/bal - Inventory 503,000
- Bills payable 7,000
4,435,60 4,435,600
0

Prepaid / Accrued Expenses

O/bal - prepaid 45,000 O/bal – accrued 29,500

Cash 2,410,75 Expenses 2,410,000
0
C/bal - accrued 33,750 C/bal - prepaid 50,000
2,489,50 2,489,500
0

Accrued Interest

Cash 69,500 O/bal 22,500

C/bal 25,000 Expense 72,000
 94,500 94,500

Current / Deferred Taxes

O/bal - DTA 2,000 O/bal – CTL 250,000
Cash 250,000 - DTL 6,500
C/bal – CTL 290,000 Expense 290,800
- DTL 7,500 C/bal - DTA 2,200

549,500 549,500

Equipment

O/bal 760,500 Carrying amt of equipt sold 120,000

Cash – purchase 150,000
Loan - purchase 90,000 C/bal 880,500

1,000,50 1,000,500
0

Accumulated Depreciation – Equipment

Carrying amt of equipt sold 105,000 O/bal 348,000

C/bal 289,500 P&L 46,500
394,500 394,500

Mortgage Loan

Cash 30,000 O/bal 100,000

C/bal 160,000 Equipment 90,000
190,000 190,000

Retained Earnings

Final dividend payable 180,000 O/bal 475,000

C/bal 752,450 P & L summary 457,450
932,450 932,450

A final dividend of $195,000 was paid, no interim dividend.