- Using The Following Financial Information For Abc Ltd Preparation And Presentation Of The Statement Of Cash Flows Acco 1 (311.71 KiB) Viewed 14 times
ABC Ltd. Statement of Profit or Loss and Comprehensive Income For the Year Ended December 31, 2015 Sales Cost of sales Gross profit Administrative and selling expenses Interest expense Depreciation of property, plant and equipment Audit fees Investment income Profit before taxation Taxes on income Profit € 30,000 (10.000) 20,000 (2,000) (2,000) (2,000) (500) 3,000 16,500 (4,000) € 12.500 The following additional information is relevant to the preparation of the statement cash flows: 1. Equipment with a net book value of €7,500 and original cost of €10,500 was sold for €7,500. 2. All sales made by the company are credit sales. 3. The company received cash dividends (from investments) amounting to €3,000, recorded as income in the statement of comprehensive income for the year ended December 31, 2015. 4. The company declared and paid dividends of €12,000 to its shareholders. 5. Interest expense for the year 2015 was €2,000, which was fully paid during the year. All administration and selling expenses incurred were paid during the year 2015. 6. Income tax expense for the year 2015 was provided at €4,000, out of which the company paid €2,000 during 2015 as an estimate.
A worksheet can be prepared to ease the development of the statement of cash flows, as follows: 2015 2014 1,000 Cash and equivalents 3,000 Accounts receivable 5,000 2,500 Inventories 2,000 1,500 Prepaid expenses Due from associates Property, plant and equipment Accounts payable Income taxes payable Deferred taxes payable Share capital Retained earnings Cash Flow Worksheet Cash and Change Operating Investing Financing equivalents 2,000 1,000 1,500 (500) 19,000 19,000 0 7,000 16,500 (9,500) 6,500 20,500 2,000 2,500 500 5,000 12,500 7,500 2,000 1,000 1,000 3,000 2,000 1,000 6,500 20,000 0 500 (2,500) (500) 500 2,000 (7,500) 1,000 1,000 7,500 9,500 3.000 3,500 10,500 (12.000) (12,000) 2,000
ABC Ltd. Statement of Cash Flows For the Year Ended December 31, 2015 (Direct method) Cash flows from operating activities Cash receipts from customers Cash paid to suppliers and employees Cash generated from operations Interest paid Income taxes paid Net cash flows from operating activities Cash flows from investing activities Proceeds from the sale of equipment Dividends received Net cash flows from investing activities Cash flows from financing activities Dividends paid Net cash flows used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year € 27,500 (20.000) 7,500 (2,000) (2,000) 7,500 3.000 (12.000) € 3,500 10,500 (12,000) 2,000 1,000 € 3.000
Details of the computations of amounts shown in the statement of cash flows are as follows: Cash received from customers during the year Credit sales Plus: Accounts receivable, beginning of year Less: Accounts receivable, end of year Cash received from customers during the year Cash paid to suppliers and employees Cost of sales Less: Inventory, beginning of year Inventory, end of year Plus: Plus: Accounts payable, beginning of year Accounts payable, end of year Less: Plus: Administrative and selling expenses paid Cash paid to suppliers and employees during the year Interest paid equals interest expense charged to profit or loss (per additional information) Income taxes paid during the year Tax expense during the year (comprising current and deferred portions) Plus: Beginning income taxes payable Plus: Beginning deferred taxes payable Ending income taxes payable Less: Less: Ending deferred taxes payable Cash paid toward income taxes Proceeds from sale of equipment (per additional information) Dividends received during 2014 (per additional information) Dividends paid during 2014 (per additional information) €30,000 2,500 (5,000) 10,000 (1,500) 2,000 12,500 (5,000) 2,000 4,000 1,000 2,000 (2,000) (3,000) €27,500 €20.000 € 2,000 € 2,000 € 7.500 € 3.000 €12,000
ABC Ltd. Statement of Cash Flows For the Year Ended December 31, 2015 (Indirect method) Cash flows from operating activities Profit before taxation Adjustments for: Depreciation of property, plant and equipment Decrease in prepaid expenses Investment income Interest expense 4₂ Increase in accounts receivable Increase in inventories Decrease in accounts payable Cash generated from operations Interest paid Income taxes paid Net cash from operating activities Cash flows from investing activities Proceeds from sale of equipment Dividends received Net cash from investing activities Cash flows from financing activities Dividends paid Net cash used in financing activities Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year € 16,500 2,000 500 (3,000) 2,000 (2,500) (500) (7,500) 7,500 (2,000) (2,000) 7,500 3,000 (12,000) € 3.500 10,500 (12,000) 2,000 1,000 € 3,000