MAVESTO LTD AND ITS SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED

30 JUNE 20X9

Notes $
Cash flows from operating activities 35 300
Cash received from customers (W1) 372 200
Cash paid to suppliers and employees (W2) (298 600)
VAT cash flow (W3) 1 000
Cash generated from operations 1 74 600
Interest received 500
Finance cost paid (3 250 + 3 750 – 2 500) ( 4 500)
Dividends received (5 000 + 4 000 – 5 000) 4 000
Dividends paid (W4) 14 300)
Normal taxation paid (W5) (22 900)
Secondary taxation on companies paid ( 2 100)
Cash flows from investing activities (26 200)
Proceeds on disposal of portion of interest in 2
subsidiary (W7) 13 800
Purchase of plant (W6) (40 000)
Replacement of plant (W6) (22 000)
Additions to plant (W6) (18 000)

Cash flows from financing activities (10 000)

Repayment of long-term loans (30 000 – 20 000) (10 000)
-
Net decrease in cash and cash equivalents (900)
Cash and cash equivalents at beginning of the
Period 5 400
Cash and cash equivalents at end of the period 3 4 500

MAVESTO LTD AND ITS SUBSIDIARY

NOTES TO THE STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
30 JUNE 20X9

1. Reconciliation of profit before taxation with cash generated from

operations
20 x9
$
Profit before taxation 57 200
Adjustments for:
Profit on disposal of shares (4 800)
Depreciation 20 000
Investment income (5 500)
Finance cost 3 250
Profit from operation before working capital changes 70 150
Working capital changes 4 450
Increase in inventories (42 600 – 30 000) (W2) (12 600)
Increase in debtors (28 272-25 080)(W1) (3 192)
Increase in creditors (51 870 – 30 381) (W2) 21 489
 Decrease in VAT account (1 247)
Cash generated from operations 74 600

2. Disposal of portion of interest in subsidiary

The group disposed of 30% of interest in a wholly

owned subsidiary during the year.

Proceeds on the sale of a 30% interest in a

subsidiary (W7) 13 800

3. Cash and cash equivalents

Cash and cash equivalents consist of cash on hand and balances with
banks. Cash and cash equivalents included in the statement of cash
flows comprise the following balance sheet amounts:

20 x 9 20 x 8
$ $
Bank 12 600 8 000
Bank overdraft (8 100) (2 600)
4 500 5 400

WORKINGS

W1. Cash receipts from customers

Gross turnover 375 000

Plus : Debtors at beginning of year 25 000 x 100/114 = 22 000
Total debtors 29 080
Dividends receivable ( 4 000)
Less: Debtors at end of year 28 272 x 100/114 = (24 800)
Total debtors (33 272)
Dividends receivable 5 000
372 200

W2. Cash paid to suppliers and employees

Cost of sales 263 000
Distribution costs 5 000
Administrative expenses 35 000
Other expenses 21 850
Less: Depreciation (20 000)
Plus: Creditors at beginning of year 30 381 x 100/114 = 26 650
Total creditors 34 131
Interest payable (30 000x15%x10/12 ( 3 750)
Less: Creditors at end of year 51 870 x 100/114 = (45 500)
Total creditors (54 370)
 Interest payable (20 000x15%x10/12 2 500
Less: Inventories at beginning of year (30 000)
Plus: Inventories at end of year 42 600
298 600
W3. VAT cash flow

Decrease in amount owing (3 349 – 2 102) ( 1 247)

Plus: Increase in VAT included in trade payables (51 870-30 381)
(W2) x 14/114 2 639
Less: Increase in VAT included in accounts receivable
(28 272 – 25 080) (W1) x 14/114 ( 392)
1 000

W4. Dividends paid

Per equity statement 20 000

Plus: Due at beginning of year 5 000
Less: Due at end of year (12 500)
Plus: Paid to outside shareholders by subsidiary (per equity statement
6 000 x 30%) 1 800
14 300

W5. Normal taxation paid

$
Per income statement 18 900
Provision 21 000
Less: Secondary taxation ( 2 100)
Plus: Due at beginning of year 12 000
Less : Due at end of year 8 000

22 900

W6. Plant

Balance on 1 July 20x8 70 000

Less: Depreciation (20 000)
50 000
Balance on 30 June 20x9 90 000
Purchases 40 000
Replacements – 55% 22 000
Additions – 45% 18 000

W7. Proceeds on sale of 30% interest in subsidiary

Net carrying amount of assets of subsidiary 20 000

30% sold 6 000
Goodwill sold (10 000 – 7 000) 3 000
9 000
Profit on the sale of a 30% interest in subsidiary 4 800
Cash flow from sale of interest 13 800