Question

N1549 - Week Two Exercise - Cashflow Question The accounts of Lolymino Ltd are set out below. They comprise an income statement for the financial year ending 31st December 2013 and balance sheets for the years 2013 and 2012 Income statement for year ended 31st December 2013 £'000 Revenue 12,000 Cost of sales 5.000 Gross profit 7,000 Profit on disposal of equipment 100 Distribution costs 2,500 Administrative costs 1,000 Profit from operations 3,600 Interest paid 204 Profit before tax 3,396 679 Profit for the year 2,717 Tax Balance sheets as at 31st December 2013 2013 '000 2012 £'000 Non-current assets Property, plant and equipment 31,000 28,000 Current assets Inventories Trade receivables Cash and cash equivalents 280 750 300 800 1,876 2,976 1,030 Total assets 33,976 29,030 Current liabilities Trade payables Tax liability Bank overdraft 350 679 300 0 1,029 400 Non-current liabilities Bank loans 3,400 2,000 Total liabilities 4,429 2,400 Equity Share capital Share premium Retained earnings 1,200 900 27,447 29,547 1,000 500 25.130 26.630 Total equity and liabilities 33,976 29,030 Additional information: The total depreciation charge for the year was £3000000 Equipment costing £5000000 with accumulated depreciation of £4000000 was sold in the year. All sales and purchases were on credit. Other expenses were paid in cash. Required: Prepare a cash flow statement for Lolymino Ltd for the year ended 31st December 2013

Answer 1

Cash flow is a statement of cash inflow and cash outflow from the organisation during the given period of time There are three types of cash flow such as cash from operating activities, cash flow from investing activities and cash flow from financing activities. It helps to know the ending cash balance of the organisation for the specific period.

Lolymino Ltd statement of cash Flows for the year ended Dec 2013 particular cash flow rom operating Activitie Net Income 2717 Adjust ment fay: Depreciationcharged Retaned Eaning share premium 3000 2317 5717 400 (20) (50) Increase in inventeries Increase in Trade recei vable Increase in Trade payable Ingrease in Decrease in Banla overdratt 50 629 (50) Tax Liabi lity cash rom Investing Actixities 1, 100 Sale of Equip ment (9900) Cl1000) purchase of Pro perty plant& eguip. cash from financing Activities Rank 10an taken ISSue ot equity capital Net increase in cash and cash eqeivalent Adds cash at the begining cashand Cashequivalent at the end 1,400 16 00 693 200 693 Property, Plantand eaeipment particular by Depred ation by Coesh Bank by Accymul ated Depreciatin 4000 by bajana cl Particulay To bal. bid 28,000 TO Profit on Sale dt Eguipment 100 To cash IBonk 11,000 3000 100 3),000 39,100 39100