Question

Question 4 (30 marks) The following represents the financial statements of Cash Smart (Pty) Ltd. Use the information contained therein and other information provided to answer the questions that follow: Statement of Comprehensive Income for Cash Smart (Pty) Ltd for the year ended 30 June 2020 R'000 95 576 62 000 33 576 6 000 39 576 Sales revenue Cost of sales Gross profit Other operating income Gross operating profit Operating expenses Operating profit Financing costs Profit before taxation Taxation for the year Profit after taxation 35 250 4 326 2 400 1 926 578 1 348 R'000 Statement of Financial Position for Cash Smart (Pty) Ltd as at 30 June 2020 2020 2019 R'000 Assets Non-current assets Property, plant and Equipment (@carrying value) 21350 19 850 Current assets Inventories 7 142 7 380 Trade receivables 15 952 12 988 Cash and cash equivalents 13 092 9 876 Total assets 57 536 50 094 Equity and liabilities Ordinary share capital (par value of R0.50) Share premium Retained earnings Non-current liabilities 12 000 6 000 5 235 10 000 5 000 4 607

Answer 1

Part A

Smart (PVT) Ltd.
Statements of cash flow under direct method
For the year ended December 31, 2020
All amounts are expressed in (R`000)
operating activity
Cash Received from Sales	92,612
Other operating income received	6,000
Less: Cash paid for Inventory purchase	(61,980)
Less: Other operating expense Paid (35250-1000)	(34,250)
Less: Interest expense Paid	(2,400)
Less: Income Tax expense Paid	(546)
Net cash flow provided by operating activity		(564)
Investing activity
Payment for purchase of equipment	(2,500)
Net cash flow provided by investing activity		(2,500)
Financing activity
Dividend Paid (Number of shares = 12000/0.50=24000) (24000*0.03)	(720)
Repayment of Bond payable (24000-20000)	4,000
Proceeds from issue of common stock ((6000+12000)-(5000+10000))	3,000
Net cash flow used by financing activity		6,280
Net Increase in cash		3,216
Add: beginning cash balance		9,876
Ending cash balance		13,092

Part B

Trade receivable
	Debit		Credit
Beg. Balance	12,988
Sales	95,576	Cash Received from Sales (12988+95576-15952)	92,612
Total	108,564	Total	92,612
End Balance (108564-92612)	15,952
Inventory
	Debit		Credit
Beg. Balance	7,380
Inventory purchased (7142+62000-7380)	61,762	Cost of goods sold	62,000
Total	69,142	Total	62,000
End Balance (69142-62000)	7,142
Trade payable
	Debit		Credit
		Beg. Balance	9,322
Cash paid for Inventory purchase (9322+61762-9104)	61,980	Inventory purchased	61,762
Total	61,980	Total	71,084
		End Balance (71084-61980)	9,104
Income tax payable
	Debit		Credit
		Beg. Balance	1,165
Cash paid for income tax (1165+578-1197)	546	Income tax expense	578
Total	546	Total	1,743
		End Balance (1743-546)	1,197

Property and Equipment at beginning	19,850
Less: Depreciation (1 million = 1000 thodsand	(1,000)
Add: purchase of equipment (21350+1000-19850)	2,500
Property and Equipment at ending	21,350