Question

Dural Trade Ltd Balance Sheet (Statement of financial position) as at: 2017 $ 2018 $ Assets Bank 71,760 92,400 Accounts receivable 115,200 131,760 Inventory 130,320 152,520 Investments 108,000 - Land - 122,400 Equipment 396,000 501,200 Accumulated depreciation - equipment (171,360) (204,560) TOTAL ASSETS 649,920 795,720 Liabilities and Shareholders’ Equity Accounts payable 73,200 82,680 Operating expenses accrued 6,000 7,320 Dividend payable 14,400 17,280 Share capital (Ordinary shares @ $2 each) 360,000 432,000 Share premium 17,280 31,680 Retained earnings 179,040 224,760 TOTAL LIABILITIES AND EQUITY 649,920 795,720 Dural Trade Ltd Income statement for the year ended 31st December 2018 $ $ Sales 1,432,800 Less: Cost of sales 850,680 Gross profit 582,120 Add: Gain on sale of investments 9,600 591,720 Less: Operating expenses Depreciation expenses 43,200 Other expenses 403,200 446,400 Profit before tax 145,320 Less: Tax expense 34,800 Net profit after tax 110,520 3 Additional information: (i) Cash purchases of land and equipment were made during the year. (ii) An equipment was sold at its net book value for $25,400 for cash. (iii) The investments were sold for cash at $117,600. (iv) A rights issue at a premium price was made on the basis of 1 share for every 20 held. A bonus share, which was made out of retained earnings, was also given for every rights issue share. Cash has been received for the rights issue. (v) The directors declared a cash dividend during the year. REQUIRED: Prepare a Cash Flow Statement for Dural Trade Ltd forthe year ended 31 December 2018 from the above information given (note that you should use the Direct Approach).

Answer 1

50 51 52 Income Statement Sales Cost of Goods Sold Adjustments 1,432,800 Increase in Accounts Receivable (850,680) Increase in Inventory Increase in Accounts Payable (403,200) Increase in accrued Payable Increase in Dividend Payable (34,800) Depreciation 53 54 55 56 57 58 59 Cash Flows From Operations (16,560) 1,416,240 Cash Collected from Accounts Receivable (22,200) 9,480 (863,400) Cash Paid to Suppliers 1,320 (399,000) Cash paid for Operating expenses 2,880 (34,800) Cash paid for Tax expenses 43,200 Operating expenses Tax expense 60 Dural Trade Ltd Cash flow Statement For the period Ended 2018 61 (Direct method) 62 63 Details $ Amount $ 64 65 1,416,240 66 Particulars Cash flows from operating Activities Cash Collected from Accounts Receivable Less Cash Paid to Suppliers Cash paid for Operating expenses Taxes Paid Net Cash provided by Operating Activities 67 (863,400) (399,000) (34,800) 68 (1,297,200) 119,040 69 70

71 72 73 Cash Flows from Investing Activities Sale of Investment Purchase of Land Purchase of Equipment Sale of Equipment Net cash used in Investing Activities 117,600 (122,400) (140,600) 25,400 74 75 Equipment 396000 10000 140600 25400 501200 Acc.Dep. -Equipment 10000 171360 204560 43200 76 77 (120,000) 78 79 72,000 14,400 80 81 (64,800) Cash Flows from Financing Activities Proceeds from issue of equity shares Share Premium received Issue of Bonus shares Net cash Provided by Financing Activities Net Increase in Cash & its equivalents Beginning Balance of Cash & its equivalents Ending Balance of Cash & its equivalents 82 83 21,600 20,640 71,760 92,400 84 85 86