The draft final accounts of Adomako Ltd for the year ended 31 December 2021 are as follows: Statement of Profit or Loss
Posted: Sat May 07, 2022 7:46 pm
The draft final accounts of Adomako Ltd for the year ended 31
December 2021 are as follows: Statement of Profit or Loss and Other
Comprehensive Income for the year ended 31 December 2021 GH¢
Turnover 306,500 Cost of sales 260,000 ------------ Gross Profit
46,500 Selling, General and Administration expenses 14,000
--------- Operating profit 32,500 Investment Income 5,000
---------- Net Profit on ordinary activities before interest and
tax 37,500 Interest expense 4,000 ---------- Net Profit before tax
33,500 Taxation 3,000 ---------- Net profit on ordinary activities
after tax 30,500 Extra-ordinary item (Net insurance proceeds from
flood disaster settlement) 1,800 ---------- Net Profit transferred
to Retained Profit 32,300 ====== Statement of changes in equity
[Retained Earnings column] for the Year Ended 31 December 2021 GH¢
Balance b/d 13,800 Add Profit for the year 32,300 ---------- 46,100
Less Dividends 12,000 --------- Balance c/d 34,100 =======
Statement of financial position as at 31/12/2021 31/12/2020 ASSETS
GH¢ GH¢ Cash 100 250 Short term investments 3,700 1,350 Accounts
Receivable 19,300 12,000 Inventory 10,000 19,500 Investments 25,000
25,000 PPE at cost 37,300 19,100 Accumulated Depreciation :PPE
(14,500) (10,600) ---------- --------- 80,900 66,600 ====== ======
SHAREHOLDERS EQUITY Stated Capital 15,000 12,500 Retained Earnings
34,100 13,800 --------- --------- Net Worth 49,100 26,300
---------- ---------- LIABILITIES Trade payables 2,500 18,900
Interest payables 2,300 1,000 Income Tax Payable 4,000 10,000 Long
term debt 14,900 10,400 Finance lease obligation 8,100 - ----------
--------- Total liabilities 31,800 40,300 ----------- ----------
Equity and Liabilities 80,900 66,600 ======= ====== Additional
Information: i) During the year, the company acquired some new
items of PPE. One of the items costing GHC9,000 was acquired on
lease. ii) An item of PPE which had cost GHC800 and with
accumulated depreciation of GHS600, was disposed of for GHC200
cash. iii) Accounts receivable at the end of the year included
GHC1,000 of interest receivable. During the year, interest income
received amounted to GHC2,000. Investment income consists of
interest income and dividend income The board of directors were not
satisfied with the draft accounts for 2021 on grounds that in spite
of the profit after tax of GHC32,300, the cash position has
worsened by GHC150. They suspect embezzlement of cash on the part
of the Financial Director. Required As the financial accountant,
you are required to prepare a detailed statement of cash flows in a
manner prescribed by IFRS 7 to explain the situation to the
Investigator who has been detailed from the Economic and Organised
Crime Office and to allay the fears and suspicion of the
directors.
December 2021 are as follows: Statement of Profit or Loss and Other
Comprehensive Income for the year ended 31 December 2021 GH¢
Turnover 306,500 Cost of sales 260,000 ------------ Gross Profit
46,500 Selling, General and Administration expenses 14,000
--------- Operating profit 32,500 Investment Income 5,000
---------- Net Profit on ordinary activities before interest and
tax 37,500 Interest expense 4,000 ---------- Net Profit before tax
33,500 Taxation 3,000 ---------- Net profit on ordinary activities
after tax 30,500 Extra-ordinary item (Net insurance proceeds from
flood disaster settlement) 1,800 ---------- Net Profit transferred
to Retained Profit 32,300 ====== Statement of changes in equity
[Retained Earnings column] for the Year Ended 31 December 2021 GH¢
Balance b/d 13,800 Add Profit for the year 32,300 ---------- 46,100
Less Dividends 12,000 --------- Balance c/d 34,100 =======
Statement of financial position as at 31/12/2021 31/12/2020 ASSETS
GH¢ GH¢ Cash 100 250 Short term investments 3,700 1,350 Accounts
Receivable 19,300 12,000 Inventory 10,000 19,500 Investments 25,000
25,000 PPE at cost 37,300 19,100 Accumulated Depreciation :PPE
(14,500) (10,600) ---------- --------- 80,900 66,600 ====== ======
SHAREHOLDERS EQUITY Stated Capital 15,000 12,500 Retained Earnings
34,100 13,800 --------- --------- Net Worth 49,100 26,300
---------- ---------- LIABILITIES Trade payables 2,500 18,900
Interest payables 2,300 1,000 Income Tax Payable 4,000 10,000 Long
term debt 14,900 10,400 Finance lease obligation 8,100 - ----------
--------- Total liabilities 31,800 40,300 ----------- ----------
Equity and Liabilities 80,900 66,600 ======= ====== Additional
Information: i) During the year, the company acquired some new
items of PPE. One of the items costing GHC9,000 was acquired on
lease. ii) An item of PPE which had cost GHC800 and with
accumulated depreciation of GHS600, was disposed of for GHC200
cash. iii) Accounts receivable at the end of the year included
GHC1,000 of interest receivable. During the year, interest income
received amounted to GHC2,000. Investment income consists of
interest income and dividend income The board of directors were not
satisfied with the draft accounts for 2021 on grounds that in spite
of the profit after tax of GHC32,300, the cash position has
worsened by GHC150. They suspect embezzlement of cash on the part
of the Financial Director. Required As the financial accountant,
you are required to prepare a detailed statement of cash flows in a
manner prescribed by IFRS 7 to explain the situation to the
Investigator who has been detailed from the Economic and Organised
Crime Office and to allay the fears and suspicion of the
directors.