Chapter 8 Solutions Cash Flow Statement: Account Classification

Chapter 8 Solutions
Cash flow statement

Classification Operating activity Operating activity Operating activity Investing activity Investing activity Investing activity Operating activity Operating activity Financing activity Financing activity Financing activity Operating activity Operating activity Operating activity Operating activity Investing activity Investing activity
Question 8.1 Account (a) Cash sales (b)Law suit damages (c) Investment income (d)Purchase of investments (e) Sale of non-current assets (f) Purchase of non-current assets (g)Receipts from customers (h)Payments to suppliers (i) Mortgage increase (j) Repayment of borrowings (k) New share capital (l) Interest paid (m) Rent paid (n)Wages paid (o) Interest received (p)Sale of investments (q)Loans to employees Question 8.2
Hart Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING ACTIVITIES $ Receipts from customers 700 000 Payments to suppliers and employees *1 (693 000) Dividends received (6 600) Interest received 10 000 NET OPERATING CASH FLOWS CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant and (40 000) equipment NET INVESTING CASH FLOWS CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares Borrowings acquired Borrowings repaid *2 NET FINANCING CASH FLOWS
2002 Nelson Australia Pty Limited
10 000
(40 000)
50 000 10 000 (7 000) 53 000
150
Company Accounting & Financial Statements, 3e, Solutions Manual
NET INCREASE (DECREASE) IN CASH HELD Cash at 1 July Cash at 30 June
23 000 10 000 33 000
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151
Note Reconciliation of cash Cash accounts Bank 1 July $ 10 000 30 June $ 33 000
Note Reconciliation of net profit (loss) with cash flows from operating activities $ Net profit (Loss) after income tax 10 000 add (subtract) Non-cash items appearing in the Income statement Nil add (subtract) Operating cash flows on the Balance sheet Nil Cash flows from operating activities 10 000 *1 Payments to suppliers and employees consist of: $ Purchases 420 000 Advertising 35 000 Rates 20 000 Motor vehicle expenses 18 400 Wages 200 000 693 400 Borrowings repaid consist of: $ Mortgage 2 000 Bank loan 5 000 7 000
*2
Question 8.3 Account reconstruction Debentures

$ $
31 Dec 30 Jun
Bank *1 Closing balance
300 1 Jul 000 600 30 000 June 900 000
Opening balance Purchases *2
400 000 500 000 900 000
*1 Borrowings repaid $300 000 *2 Borrowings acquired$500 000 *1 Payments to suppliers and employees consist of:
152
Purchases Wages Advertising Rent
$ 680 000 150 000 32 000 40 000 902 000
Long Ltd Cash flow statement for the year ended 30 June 2003 CASH FLOWS RELATED TO OPERATING ACTIVITIES $ $ Receipts from customers cash sales 882 000 Payments to suppliers and employees *1 (902 000) Commission received 3 000 Interest received 22 000 Interest paid (5 000) Other Damages from law suit 30 000 NET OPERATING CASH FLOWS 30 000 CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant and (250 equipment 000) Cash paid for purchases of investments (200 000) Loans repaid 4 000 NET INVESTING CASH FLOWS (446 000) CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares 130 000 Borrowings acquired Debentures 500 000 Mortgage 50 000 Borrowings repaid Debentures (300 000) NET FINANCING CASH FLOWS 380 000 NET INCREASE (DECREASE) IN CASH HELD (36 000) Cash at the beginning of the year 45 000 Cash at the end of the year 9 000 Note Reconciliation of cash Cash accounts Bank Deposits at call At start of year $ 35 000 10 000 45 000 At end of year $ (6 000) 15 000 9 000
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Note Reconciliation of net profit (loss) with cash flows from operating activities $ $ Net profit (Loss) after income tax 30 000 add (subtract) Non-cash items appearing in the Income statement Nil add (subtract) Operating cash flows on the Balance sheet Cash flows from operating activities Nil 30 000
154
Question 8.4 Account reconstructions Stock

$ $
1 Jul 30 June
Opening balance Creditors (purchases)
72 30 000 Jun 468 000 540 000 Creditors

$
Cost of sales Closing balance
470 000 70 000 540 000

$
30 Jun
Discount revenue Bank Closing balance
1 000 1 Jul 464 000 15 30 000 June 480 000

$
Opening balance
12 000 468 000 480 000

$
Stock (purchases)
Wages expense 30 Jun Bank Accrued wages (BDA) 161 1 Jul 500 2 500 30 Jun 164 000 Advertising
$ $
Accrued wages (reversal) Profit & loss
4 000 160 000 164 000
1 Jul 30 Jun
Prepaid advertising Bank
2 000 30 Jun 30 400 32 400

$
Profit and loss Prepaid advertising
30 000 2 400 32 400

$
Long service leave payable 31 Dec 30 Jun Bank Closing balance 6 000 1 Jul 50 30 000 June 56 000 Opening balance L. S. Leave expense 42 000 14 000 56 000
Income tax payable
Chapter 8 Solutions $
155 $
28 Jul
16 1 Jul 000 30 Deferred tax 415 30 Jun June asset Bank 48 400 Closing balance 18 779 83 594 Total tax paid = $16 000 + $48 400 =
Bank
Opening balance Income tax expense Deferred tax liability
16 000 64 800 2 794
83 594 $64 400
*1 Payments to suppliers and employees consist of: $ Payments to creditors 464 000 Wages 161 500 Advertising 30 400 Long service leave paid 6 000 Rent 5 000 666 900 Hilite Ltd Statement of cashflow for year ended 30 June 2003 CASH FLOWS RELATED TO OPERATING $ $ ACTIVITIES Receipts from customers 900 000 Payments to suppliers and employees *1 (666 900) Interest paid (6 000) Income taxes paid (64 400) NET OPERATING CASH FLOWS 162 700 CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant (200 and equipment 000) NET INVESTING CASH FLOWS (200 000) CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares 41 000 NET FINANCING CASH FLOWS 41 000 NET INCREASE (DECREASE) IN CASH HELD 3 700 Cash at the beginning of the year (82 800) Cash at the end of the year (79
156
100) Note Reconciliation of cash Cash accounts Cash in registers Bank overdraft At start of year $ (82 800) (82 800) At end of year $ 21 600 (100 700) 79 100
Note Reconciliation of net profit (loss) with cash flows related to operating activities $ Net profit (Loss) after income tax add (subtract) Non-cash items appearing in the Income statement add (subtract) Operating cash flows on the Balance sheet Creditors Accrued wages Income tax payable Deferred tax liability Long service leave payable Prepaid advertising Stock Deferred tax asset Cash flows related to operating activities
$ 151 200 Nil
3 000 (1 500) 2 779 (2 794) 8 000 (400) 2 000 415
11 500 162 700
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Question 8.5 Debtors

$ $
1 Jul 30 June
Opening balance Credit sales
65 30 000 Jun 800 000 865 000
Bank Closing balance
793 000 72 000 540 000
Interest revenue
$ $
30 Jun
Prepaid interest Profit and loss
1 000 30 Jun 7 500 8 500
Bank
8 500 8 500
Annual leave payable

$ $
31 Dec 30 Jun
34 1 Jul 000 4 000 30 June 38 000
Opening balance Leave expense
6 000 32 000 38 000
Wages expense
$ $
1 Jul 30 Jun
Prepaid wages Bank
6 000 30 Jun 148 500 154 500
Profit and loss Prepaid wages
150 000 4 500 154 500
Income tax payable

$ $
28 Jul
10 1 Jul 000 30 Deferred tax 3 000 30 Jun June liability Bank 12 950 Closing balance 8 200 34 150 Total tax paid = $10 000 + $12 950 =
Bank
Opening balance Income tax expense
10 000 24 150
34 150 $22 950
*1 Payments to suppliers and employees consist of:
158
Purchases Wages Advertising Annual leave paid Rent
$ 500 000 148 500 26 000 34 000 14 000 722 500
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159
Accrual Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING $ $ ACTIVITIES Receipts from customers 793 000 Payments to suppliers and employees *1 (722 500) Interest received 8 500 Interest paid (5 000) Income taxes paid (22 950) NET OPERATING CASH FLOWS 51 050 CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant (150 and equipment 000) Loans repaid 20 000 NET INVESTING CASH FLOWS (130 000) CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares 100 000 Borrowings repaid (22 000) NET FINANCING CASH FLOWS 78 000 NET INCREASE (DECREASE) IN CASH HELD (950) Cash at the beginning of the year 177 000 Cash at the end of the year 176 050 Note Reconciliation of cash Cash accounts Bank Deposits at call At start of year $ 27 000 150 000 177 000 At end of year $ (3 950) 180 000 176 050
Note Reconciliation of net profit (loss) with cash flows related to operating activities $ $ Netprofit (Loss) after income tax 56 350 add (subtract) Non-cash items appearing in the Income statement Nil add (subtract) Operating cash flows on the Balance sheet
160
Prepaid interest revenue Annual leave payable Income tax payable Deferred tax liability Debtors Prepaid wages Cash flows related to operating activities
1 000 (2 000) (1 800) 3 000 (7 000) 1 500
(5 300) 51 050
Question 8.6
ACTIVITY ITEM Operati ng X X X X X X X X X X X X X X X X X X X X X X Investin g Financin g RECONCILIATION NonCash Item Operatin g Item
1 2 3 4 5 6 7 8 9
Cash sales Interest paid New share capital Debentures repaid Increase in debtors Income tax paid Annual leave paid Income tax payable increase Dividends received
10 Doubtful debts expense 11 Purchase of plant 12 Depreciation expense 13 Increase in borrowings 14 Decrease in creditors 15 Increase in accruals 16 Wages paid 17 Impairment losses 18 Increase in inventory 19 Receipts from receivables 20 Interest income Loan from finance co. 22 Loan to supplier
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23 Proceeds from asset sale 24 Profit on asset disposal 25 Decrease in GST payable 26 Advertising paid X
X X X
162

$ $
1 Jul
Opening balance
28 30 000 Jun 350 000 378 000 Plant

$
Bad debts Bank
4 000 336 000 38 000 378 000
30 June
Credit sales
Closing balance
1 Jul 30 June
Opening balance Plant acquisition
150 30 000 Jun 160 000 310 000
Disposal of plant Closing balance
110 000 200 000 310 000
Accumulated depreciation of plant

$ $
31 Dec 30 Jun
5 000 1 Jul 75 30 000 June 80 000
Opening balance Depreciation expense
60 000 20 000 80 000
Disposal of plant
$ $
30 Jun
Plant (at cost)
110 30 000 Jun
Accum. depreciation Profit and loss (loss) Bank (proceeds)
5 000 48 000 57 000 110 000
110 000 Debentures

$
1 Dec 30 Jun
30 1 Jul 000 140 30 000 June 170 000
Opening balance Bank
100 000 70 000 170 000
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*1 Payments to suppliers and employees consist of: $ Wages 256 000 Rent 15 000 271 000
164
Ross Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING ACTIVITIES $ Receipts from customers 336 000 Payments to suppliers and employees *1 (271 000) Interest paid (5 000) NET OPERATING CASH FLOWS CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant and (160 equipment 000) Proceeds from the sale of property, plant and 7 000 equipment Cash paid for purchases of investments (50 000) NET INVESTING CASH FLOWS CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares Borrowings acquired Borrowings repaid NET FINANCING CASH FLOWS NET INCREASE (DECREASE) IN CASH HELD Cash at the beginning of the year Cash at the end of the year Note Reconciliation of cash Cash accounts Bank Deposits at call At start of year $ 16 000 30 000 46 000 At end of year $ 8 000 45 000 53 000
60 000
(153 000)
60 000 70 000 (30 000) 100 000 7 000 46 000 53 000
Note Reconciliation of net profit (loss) with cash flows related to operating activities $ Net profit (loss) after income tax add (subtract) Non-cash items appearing in the Income statement Loss on sale of plant Doubtful debts Depreciation of plant Impairment loss - Investments add (subtract) Operating cash flows on the Balance sheet
$ (40 000)
48 2 20 40
000 000 000 000
110 000 70 000
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165
Accounts receivable Cash flows related to operating activities
(10 000) 60 000
166
Question 8.8 Advertising

$ $
1 Jul 30 Jun
1 000 30 Jun 25 600 26 600

$
Profit and loss Prepaid advertising
26 000 600 26 600

$
Long service leave payable 31 Dec 30 Jun Bank Closing balance 34 1 Jul 000 10 30 000 June 44 000
$
Opening balance L. S. Leave expense
12 000 32 000 44 000

$
Income tax payable 28 Jul 30 Jun 3 500 1 Jul Opening balance 8 500 30 Income tax June expense Closing balance 6 800 18 800 Total tax paid = $3 500 + $8 500 = $12 000 Equipment
$ $
Bank Bank
3 500 15 300 18 800
1 Jul 30 June
Opening balance Plant acquisition
180 30 000 Jun 50 000 230 000
Disposal of equipment Closing balance
30 000 200 000 230 000
Accumulated depreciation of equipment

$ $
31 Dec 30 Jun
Disposal of equipment Closing balance
12 1 Jul 000 123 30 000 June 135 000
100 000 35 000 135 000
Disposal of equipment
$ $
30
Equipment (at
30 30
Accum.
12 000
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167
Jun
cost) Profit and loss (profit)
000 Jun 2 500 32 500
depreciation Bank (proceeds)
20 500 32 500
*1 Payments to suppliers and employees consist of: $ Purchases 500 000 Wages 150 000 Advertising 25 600 Long service leave paid 34 000 709 600
168
Cashless Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING ACTIVITIES $ Receipts from customers 800 000 Payments to suppliers and employees *1 (709 600) Interest received 7 500 Income taxes paid (12 000) NET OPERATING CASH FLOWS CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant and (50 000) equipment Proceeds from the sale of property, plant and 20 500 equipment NET INVESTING CASH FLOWS CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares Borrowings repaid NET FINANCING CASH FLOWS NET INCREASE (DECREASE) IN CASH HELD Cash at the beginning of the year Cash at the end of the year Note Reconciliation of cash Cash accounts Bank Cash in registers At start of year $ (34 500) 4 000 (30 500) At end of year $ (4 100) 6 000 1 900
85 900
(29 500)
6 000 (30 000) (24 000) 32 400 (30 500) 1 900
Note Reconciliation of net profit (loss) with cash flows related to operating activities $ Net profit (loss) after income tax 43 add (subtract) Non-cash items appearing in the Income statement Profit on sale of equipment (2 500) Depreciation of equipment 35 000 Impairment loss - Goodwill 8 000 40 84 add (subtract) Operating cash flows on the Balance sheet Long service leave payable (2 000)
$ 700
500 200
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169
Income tax payable Prepaid advertising Cash flows related to operating activities
3 300 400
1 700 85 900
170

$ $
1 Jul 30 June
62 30 000 Jun 290 000 352 000
282 000 70 000 352 000
Interest revenue
$ $
30 Jun
Accrued interest Profit and loss
200 30 Jun 5 000 5 200
Bank Accrued interest
4 800 400 5 200
Annual leave payable

$ $
30 Jun
24 1 Jul 000 42 30 000 June 66 000

$
Opening balance Annual leave expense
60 000 6 000 66 000

$
Income tax payable 28 Jul 30 Jun Bank Bank Deferred tax asset Closing balance 11 1 Jul 500 0 600 30 June 9 360 Opening balance Income tax expense 11 500 25 200
6 240 36 700 Total tax paid = $11 500 + $9 600 = $21 100 Dividends payable
$
36 700
1 Oct 1 Mar 30 Jun
Bank Bank Closing balance
15 000 14 000 16 000 45 000
1 Jul 1 Feb 30 Jun
Opening balance Interim dividend Final dividend
15 000 14 000 16 000 45 000
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171
Total dividends paid = $15 000 + $14 000 = $29 000 *1 Payments to suppliers and employees consist of: $ Purchases 91 000 Wages 86 000 Annual leave paid 24 000 201 000
172
Brompley Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING ACTIVITIES $ Receipts from customers 282 000 Payments to suppliers and employees *1 (201 000) Interest received 4 800 Interest paid (4 000) Income taxes paid (21 100) NET OPERATING CASH FLOWS CASH FLOWS RELATED TO FINANCING ACTIVITIES Borrowings acquired 35 000 Borrowings repaid (30 000) Dividends paid (29 000) Other NET FINANCING CASH FLOWS NET INCREASE (DECREASE) IN CASH HELD Cash at the beginning of the year Cash at the end of the year Note Reconciliation of cash Cash accounts Cash at bank At start of year $ (21 695) At end of year $ 15 005
60 700
(24 000) 36 700 (21 695) 15 005
Note Reconciliation of net profit (loss) with cash flows related to operating activities $ Net profit (loss) after income tax add (subtract) Non-cash items appearing in the Income statement Depreciation expense add (subtract) Operating cash flows on the Balance sheet Stock Debtors Deferred tax asset $ 58 800 25 000 83 800 (1 000) (8 000) 9 360
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Accrued interest revenue Income tax payable Annual leave payable Cash flows related to operating activities
(200) (5 260) (18 000)
(23 100) 60 700
174

$ $
1 Jul 30 June
91 30 000 Jun 400 000 491 000 Creditors

$
373 540 117 460 491 000
30 Jun
395 1 Jul 080 56 30 000 June 451 080 Rent expense

$
Opening balance Purchases
45 000 406 080 451 080

$
30 Jun
Bank Accrued rent
16 1 Jul 050 2 350 30 Jun 18 400

$
Accrued rent Profit & loss
3 400 15 000 18 400

$
Wages expense 1 Jul 30 Jun Prepaid wages Bank 2 860 30 Jun 59 140 62 000
$
Profit & loss Prepaid wages
60 000 2 000 62 000

$
Income tax expense 28 Jul 12 1 Jul 000 30 Bank 21 30 Jun 270 June Closing balance 15 000 48 270 Total tax paid = $12 000 + $21 270 = Bank Opening balance Income tax expense 12 000 36 270 48 270 $33 270
Dividends payable
Chapter 8 Solutions $
175 $
1 Nov 30 Jan 30 Jun
40 000 20 000 60 000 45 000

$
1 Jul 1 Dec 30 Jun
Opening balance Interim dividend Final dividend
40 000 20 000 60 000 120 000

$
Plant 1 Jul 30 June Opening balance Plant acquisition 112 30 000 Jun 146 000 258 000
$
8 000 250 000 258 000

$
Accumulated depreciation of plant 31 Dec 30 Jun Disposal of plant Closing balance 6 000 1 Jul 20 30 620 June 26 620
$
18 700 7 920 26 620

$
Disposal of plant 30 Jun Plant (at cost) Profit and loss (profit) 8000 30 Jun 1 000 9 000 Premises
$ $
Accum. depreciation Bank (proceeds)
6000 3000 9 000
1 Jul
Opening balance Revaluation
30 June
Plant acquisition
182 000 30 000 28 30 000 Jun 240 000
Closing balance
240 000 240 000
Total dividends paid = $40 000 + $20 000 = $60 000 *1 Receipts from customers consist of: $
176
Cash sales Debtors receipts
231 000 373 540 604 540
*2 Payments to suppliers and employees consist of: $ Payments to creditors 395 080 Wages 59 140 Rent 16 050 470 270 Danone Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING ACTIVITIES $ Receipts from customers *1 604 540 Payments to suppliers and employees *2 (470 270) Income taxes paid (33 270) NET OPERATING CASH FLOWS CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant and equipment Proceeds from the sale of property, plant and equipment Cash paid for purchases of investments NET INVESTING CASH FLOWS CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares Borrowings acquired Dividends paid NET FINANCING CASH FLOWS NET INCREASE (DECREASE) IN CASH HELD Cash at the beginning of the year Cash at the end of the year
101 000
(174 000) 3 000 (30 000) (201 000) 30 000 50 000 (60 000) 20 000 (80 000) 32 440 (47 560)
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Note Reconciliation of cash Cash accounts Bank Deposits at call At start of year $ 12 440 20 000 32 440 At end of year $ (57 560) 10 000 (47 560)
Note Reconciliation of net profit (loss) with cash flows related to operating activities $ $ Net profit (loss) after income tax 78 630 add (subtract) Non-cash items appearing in the Income statement Profit on plant sale (1 000) Depreciation expense 7 920 Impairment loss - Goodwill 6 000 Doubtful debts 3 000 15 920 94 550 add (subtract) Operating cash flows on the Balance sheet Debtors (26 460) Stock 19 100 Prepaid wages 860 Income tax payable 3 000 Creditors 11 000 Accrued rent (1 050) 6 450 Cash flows related to operating activities 101 000 Question 8.11 Debtors
$ $
1 Jul 30 June
40 30 000 Jun 593 500 633 500 Creditors

$
563 750 69 750 633 500
30 Jun
290 1 Jul 850 84 30 400 June 375
Opening balance Purchases
79 000 296 250 375
178
250 Annual leave payable

$
250
$
30 Jun
10 1 Jul 500 1 000 30 June 11 500
Opening balance Annual leave expense
2 000 9 500 11 500
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Advertising
$ $
1 Jul 30 Jun
3 850 30 Jun 37 650 41 500
Profit & loss Prepaid advertising
3 000 3 000 41 500
Income tax payable

$ $
28 Jul
15 1 Jul 000 30 Bank 19 30 Jun 100 June Deferred tax 13 liability 800 Closing balance 16 000 63 900 Total tax paid = $15 000 + $19 100 =
$
Bank
Opening balance Income tax expense
15 000 48 900
63 900 $34 100

$
Dividends payable 1 Oct 30 Mar 15 Apr 30 Jun Bank Ordinary shares Bank Closing balance 4 000 1 Jul 50 1 Dec 000 5 000 1 Apr Opening balance Bonus dividend Interim dividend 4 000 50 000 5 000 3 000 62 000
3 000 30 Final dividend Jun 62 000 Total dividends paid = $4 000 + $5 000 = $9 000 Land and buildings
$
1 Jul 30 June
Opening balance Asset revaluation res. Plant acquisition
240 000 100 000 200 30 000 Jun 540 000

$
Closing balance
540 000 540 000

$
Asset revaluation reserve
180
30 Mar 30 Jun
Bonus dividend Closing balance
50 1 Jul 000 200 30 000 June 250 000

$
Opening balance Land and buildings
150 000 100 000 250 000

$
Ordinary shares 1 Jul 30 Jun Closing balance 150 30 000 Jun 150 000
$
Opening balance Dividends payable
100 000 50 000 150 000

$
Loan from Beneficial Finance 30 Nov 30 June Bank Closing balance 20 1 Jul 000 70 30 000 Jun 90 000 Opening balance Bank 50 000 40 000 90 000
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*1 Payments to suppliers and employees consist of: $ Payments to creditors 290 850 Wages 100 000 Annual leave paid 10 500 Advertising 37 650 439 000 Wood Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING $ $ ACTIVITIES Receipts from customers 563 750 Payments to suppliers and employees *1 (439 000) Interest received 5 000 Income taxes paid (34 100) Other insurance recovery 20 000 legal damages (21 000) NET OPERATING CASH FLOWS 94 650 CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant (200 and equipment 000) NET INVESTING CASH FLOWS (200 000) CASH FLOWS RELATED TO FINANCING ACTIVITIES Borrowings acquired 140 000 Borrowings repaid (20 000) Dividends paid (9 000) NET FINANCING CASH FLOWS 111 000 NET INCREASE (DECREASE) IN CASH HELD 5 650 Cash at the beginning of the year (850) Cash at the end of the year 4 800 Note Reconciliation of cash Cash accounts Cash on hand Bank At start of year $ 4 150 (5 000) (850) At end of year $ 16 800 (12 000) 4 800
182
Note Reconciliation of net profit (loss) with cash flows related to operating activities $ $ Net profit (loss) after income tax 99 100 add (subtract) Non-cash items appearing in the Income statement Depreciation furniture 10 000 Depreciation vehicle 1 000 Doubtful debts 5 750 Impairment loss - Goodwill 15 000 31 750 130 850
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add (subtract) Operating cash flows on the Balance sheet Creditors Annual leave payable Income tax payable Deferred tax liability Debtors Stock Prepaid advertising Cash flows related to operating activities Question 8.12 Accounts receivable
$
5 400 (1 000) 1 000 13 800 (29 750) (26 500) 850
(36 200) 94 650
1 Jul 30 June
Opening balance Rent revenue
52 30 000 Jun 420 000 472 000
408 000 64 000 472 000
Salaries and wages

$ $
30 Jun
Bank Accrued wages
243 1 Jul 000 12 30 000 June 255 000 Rent

$
Accrued wages Profit and loss
15 000 240 000 255 000

$
1 Jul 30 Jun
Prepaid rent Bank
6 000 30 Jun 52 000 58 000
Profit & loss Prepaid rent
54 000 4 000 58 000
Income tax payable

$ $
28 Jul 30
Bank Bank
10 1 Jul 000 9 700 30
Opening balance Income tax
10 000 14
184
Jun Closing balance
June
expense
700 24 700
5 000 24 700 Total tax paid = $10 000 + $9 700 = $19 700 Motor vehicles
$
1 Jul 30 June
Opening balance Vehicle acquisition
135 30 000 Jun 31 000 166 000
Disposal of vehicles Closing balance
20 000 146 000 166 000
Accumulated depreciation of vehicles

$ $
31 Dec 30 Jun
6 000 1 Jul 20 30 000 June 26 000
15 000 11 000 26 000
Disposal of vehicles
$ $
30 Jun
Vehicle (at cost)
20 30 000 Jun
Accum. depreciation Loss on disposal Bank (proceeds)
6 000 2 000 12 000 20 000
20 000 Land and buildings

$
1 Jul 30 June
Opening balance Asset revaluation res. L & B. acquisition
180 000 60 000 240 000 480 000

$
1 June 30 Jun
Disposal of L & B. Closing balance
100 000 380 000 480 000

$
Disposal of land & buildings 30 Jun Land & build. (at cost) Profit and loss 100 30 000 Jun 80 Bank (proceeds) 180 000
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(profit)
000 180 000 Ordinary shares

$
180 000
$
1 Jul 1 Nov 30 Jun Closing balance 185 30 000 Jun 185 000
$
Opening balance Dividends payable Share issue
130 000 30 000 25 000 185 000

$
Dividends payable 1 Aug 30 Nov 31 Mar 30 Jun Bank Ordinary shares Bank Closing balance 20 000 30 000 14 000 25 000 89 000 1 Jul 1 Nov 1 Mar 30 Jun Opening balance Bonus dividend Interim dividend Final dividend 20 000 30 000 14 000 25 000 89 000
Total dividends paid = $20 000 + $14 000 = $34 000 *1 Payments to suppliers and employees consist of: $ Wages and salaries 243 000 Rent paid 52 000 Maintenance 65 000 Advertising 5 000 365 000
186
Video Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING ACTIVITIES $ Receipts from customers 408 000 Payments to suppliers and employees *1 (365 000) Interest paid (7 000) Dividends received 30 000 Income taxes paid (19 700) NET OPERATING CASH FLOWS CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant and (271 equipment 000) Proceeds from the sale of property, plant and 192 000 equipment Loans to others 7 000 NET INVESTING CASH FLOWS CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares Borrowings acquired Borrowings repaid Dividends paid NET FINANCING CASH FLOWS NET INCREASE (DECREASE) IN CASH HELD Cash at the beginning of the year Cash at the end of the year Note Reconciliation of cash Cash accounts Cash in registers Bank overdraft At start of year $ 28 000 (60 000) (32 000) At end of year $ 16 000 (54 700) (38 700)
46 300
(72 000)
25 000 30 000 (2 000) (34 000) 19 000 (6 700) (32 000) (38 700)
Note Reconciliation of net profit (loss) with cash flows related to operating activities
$ Net profit (loss) after income tax add (subtract) Non-cash items appearing in the Income statement Profit on sale of land
$ 114 300
(80 000)
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Loss on sale of vehicle Depreciation of vehicles Depreciation of machinery Doubtful debts add (subtract) Operating cash flows on the Balance sheet Accrued wages Income tax payable Accounts receivable Prepaid rent Cash flows related to operating activities
2 11 16 1
000 000 000 000
(50 000) 64 300
(3 000) (5 000) (12 000) 2 000
(18 000) 46 300
*1 Payments to suppliers and employees consist of: $ Payments to creditors Wages Advertising Long service leave paid Rent Question 8.13 Debtors control
$ $
1 Jul 30 June
9 000 30 Jun 400 000
Bad debts Discount expense Bank Closing balance
600 400 387 000 21 000 409 000

$
409 000 Stock control

$
1 Jul 30 June
Opening balance Creditors (purchases)
5 000 30 Jun 323 500 328 500
Cost of sales Closing balance
312 000 16 500 328 500
188
Creditors control
$ $
30 Jun
Discount revenue Bank Closing balance
9 000 1 Jul 330 30 500 June 54 000 393 500

$
Opening balance Stock (purchases)
70 000 323 500 393 500

$
Employee benefits payable 30 Jun Bank Closing balance 9 000 1 Jul 40 30 000 June 49 000
$
Opening balance Employee benefits
35 000 14 000 49 000

$
Interest expense 1 Jul 30 Jun Prepaid interest Bank 250 30 Jun 2 750 3 000 Income tax payable
$ $
Profit & loss Prepaid interest
2 500 500 3 000
28 Jul 30 Jun
6 000 1 Jul 10 30 900 June 8 000
Opening balance Income tax expense Deferred tax asset
6 000 15 300 3 600 24 900
24 900 Total tax paid = $6 000 + $10 900 = $16 900 Motor vehicles
$
1 Jul 30 June
Opening balance Vehicle acquisition
50 000 33 000 83 000
20 Mar 30 Jun
18 000 65 000 83 000
Accumulated depreciation of vehicles

$ $
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189
31 Dec 30 Jun
11 1 Jul 000 12 30 000 June 23 000
8 000 15 000 23 000
Disposal of vehicles
$ $
20 Mar
Vehicle (at cost)
18 30 000 Jun
Accum. depreciation Loss on disposal Bank (proceeds)
11 000 4 000 3 000 18 000
18 000 Land and buildings

$
1 Jul 10 Nov 1 Jun
Opening balance L & B. acquisition Asset revaluation res.
600 3 Oct 000 826 30 000 Jun 200 000 1 626 000
$
Condemnation Closing balance
76 000 1 550 000 1 626 000

$
Ordinary shares 1 Jul 1 Aug 1 Mar 30 Jun Closing balance 1 560 1 Jun 000 1 560 000
$
Opening balance Final call Dividends payable Share issue
500 000 500 000 200 000 360 000 1 560 000
$
Dividends payable 1 Aug 23 Dec 1 Mar 30 Bank Bank Ordinary shares Closing balance 10 1 Jul 000 6 000 30 Nov 200 1 Feb 000 12 30 Opening balance Interim dividend Bonus dividend Final dividend 10 000 6 000 200 000 12
190
Jun
000 Jun 228 000
000 228 000
Total dividends paid = $10 000 + $6 000 = $16 000 *2 Receipts from customers consist of: $ Cash sales 172 000 Receipts from debtors 387 000 559 000 *1 Payments to suppliers and employees consist of: $ Payments to creditors 330 500 Wages 145 000 Employee benefits paid 9 000 484 500 Grand Ltd Cash flow statement for the year ended 30 June CASH FLOWS RELATED TO OPERATING $ $ ACTIVITIES Receipts from customers *1 559 000 Payments to suppliers and employees *2 (484 500) Dividends received 4 000 Interest paid (2 750) Income taxes paid (16 900) NET OPERATING CASH FLOWS 58 850 CASH FLOWS RELATED TO INVESTING ACTIVITIES Cash paid for purchases of property, plant (859 and equipment 000) Proceeds from the sale of property, plant 3 000 and equipment Cash paid for purchases of investments (380 000) Proceeds from the sale of investments (1 236 000) NET INVESTING CASH FLOWS CASH FLOWS RELATED TO FINANCING ACTIVITIES Cash proceeds from the issue of shares 810 000
Chapter 8 Solutions
191
Borrowings acquired Borrowings repaid Dividends paid NET FINANCING CASH FLOWS NET INCREASE (DECREASE) IN CASH HELD Cash at the beginning of the year Cash at the end of the year Note Reconciliation of cash Cash accounts Bank
200 000 (150 000) (16 000) 844 000 (331 150) 133 100 (200 050) At start of year $ 133 100 At end of year $ (200 050)
Note Reconciliation of net profit (loss) with cash flows related to operating activities $ Net profit (loss) after income tax add (subtract) Non-cash items appearing in the Income statement Impairment loss - goodwill Loss on vehicle disposal Depreciation vehicles Depreciation plant Condemnation - buildings add (subtract) Operating cash flows on the Balance sheet Creditors control Income tax payable Employee benefits payable Debtors control Stock control Deferred tax asset Prepaid interest Cash flows related to operating activities
$ (50 300)
10 4 15 40 76
000 000 000 500 000
145 500 95 200
(16 000) 2 000 5 000 (12 000) (11 500) (3 600) (250)
(36 350) 58 850

Chapter 8 Solutions Cash Flow Statement: Account Classification

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Chapter 8 Solutions Cash Flow Statement: Account Classification

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Chapter 8 Solutions

Cash flow statement

50 000 10 000 (7 000) 53 000

Company Accounting & Financial Statements, 3e, Solutions Manual

NET INCREASE (DECREASE) IN CASH HELD Cash at 1 July Cash at 30 June

23 000 10 000 33 000

2002 Nelson Australia Pty Limited

Question 8.3 Account reconstruction Debentures

Bank *1 Closing balance

300 1 Jul 000 600 30 000 June 900 000

Opening balance Purchases *2

400 000 500 000 900 000

2002 Nelson Australia Pty Limited

Company Accounting & Financial Statements, 3e, Solutions Manual

Purchases Wages Advertising Rent

$ 680 000 150 000 32 000 40 000 902 000

2002 Nelson Australia Pty Limited

2002 Nelson Australia Pty Limited

Company Accounting & Financial Statements, 3e, Solutions Manual

Question 8.4 Account reconstructions Stock

Opening balance Creditors (purchases)

72 30 000 Jun 468 000 540 000 Creditors

Cost of sales Closing balance

470 000 70 000 540 000

Discount revenue Bank Closing balance

1 000 1 Jul 464 000 15 30 000 June 480 000

12 000 468 000 480 000

Accrued wages (reversal) Profit & loss

4 000 160 000 164 000

Prepaid advertising Bank

2 000 30 Jun 30 400 32 400

Profit and loss Prepaid advertising

30 000 2 400 32 400

Income tax payable

2002 Nelson Australia Pty Limited

Opening balance Income tax expense Deferred tax liability

16 000 64 800 2 794

83 594 $64 400

2002 Nelson Australia Pty Limited

Company Accounting & Financial Statements, 3e, Solutions Manual

$ 151 200 Nil

3 000 (1 500) 2 779 (2 794) 8 000 (400) 2 000 415

11 500 162 700

2002 Nelson Australia Pty Limited

Question 8.5 Debtors

Opening balance Credit sales

65 30 000 Jun 800 000 865 000

Bank Closing balance

793 000 72 000 540 000

Prepaid interest Profit and loss

1 000 30 Jun 7 500 8 500

Annual leave payable

Bank Closing balance

34 1 Jul 000 4 000 30 June 38 000

Opening balance Leave expense

6 000 32 000 38 000

Prepaid wages Bank

6 000 30 Jun 148 500 154 500

Profit and loss Prepaid wages

150 000 4 500 154 500

Income tax payable

Opening balance Income tax expense