Question

Only Answer Question 1 Please

Preparation of a statement of cash flows A summarised comparative statement of financial position of Bronze Ltd is presented below, together with a statement of profit or loss and other comprehensive income for the year ended 30 June 2019 LO3, 4, 5 30 June 2018 30 June 2019 $ 35000 105000 $45000 69000 (3000) 45000 53000 187 000 (35 000) $361000 Cash Trade receivables Allowance for doubtful debts Inventories Equity investments Plant Accumulated depreciation (6000) 67000 60000 225000 (53000) $433000 $65000 5000 15000 30000 80000 100000 2000 64 000 75000 Accounts payable Accrued interest Current tax payable Deferred tax Borrowings Share capital Investment revaluation reserve Retained earnings 7 000 18000 37000 100000 100000 7000 89000 $361 000 $433000 BRONZE LTD Statement of profit or loss and other comprehensive income for the year ended 30 June 2019 $1 035000 (774000) 261000 (76000) (96000) (7000) 82000 (24000) 58000 Sales Cost of sales Gross profit Distribution costs Administration costs Interest expense Profit before tax Income tax expense Profit for the year Other comprehensive income Gain on revaluation of investments (net of tax) Total comprehensive income 5 000 $ 63000 Additional information The movement in the allowance for doubtful debts for the year comprises the following $3000 5000 (2000) $6000 Balance at 30 June 2018 Charge for year Bad debts written off Balance at 30 June 2019 Equity investments are shares in other companies that are measured at fair value, with increases/ decreases being recognised in other comprehensive income, and accumulated in the investment revaluation reserve until investments are sold There were no disposals of plant during the year . A dividend of S33 000 was paid during the year There were no acquisitions or disposals of investments during the year Required 1. Using the direct method of presenting cash flows from operating activities, prepare a state- ment of cash flows in accordance with AASB 107/IAS 7 for the year ended 30 June 2019 2. Prepare the operating activities section of the statement of cash flows using the indirect method of presentation.

Answer 1

BRONZE LTD

Statement of Cash flows (Direct Method)

For the Year ended 30th June 2019

CASH FLOW FROM OPERATING ACTIVITIES	Amount
Cash receive from customer	$ 999000
Paid for Supplies	(786000)
Paid for Operating Expenses	(177000)
Paid for Interest Expenses	(5000)
Paid for Tax expenses	(14000)
NET CASH PROVIDED BY OPERATING ACTIVITY	$ 17000

BRONZE LTD

Statement of Cash flows (Indirect Method)

For the Year ended 30th June 2019

	Cash flow from Operating Activity
	Net profit before tax	82000
add:-	Allowance for doubtful debts	3000
	Depreciation	18000
	Discount of share	5000
		108000
Less:	Non Cash and Non operating increase or decrease	45000	63000
	Change in working capital
	Increase of Accounts receivable	-36000
	Increase of Inventories	-22000
	Accounts payable	10000
	Accrued Interest	2000
			-46000
	Cash flow from Investing activity		17000

Working Note :

Change in vaue of assest and liablities
	30th june 2018	30th june 2019	Increase/decrease
cash	45000	35000	-10000
Trade receivable	69000	105000	36000	Operating Activity
Allowance for doubtful debts	-3000	-6000	-3000	Operating Activity
Inventories	45000	67000	22000	Operating Activity
Equipment Investment	53000	60000	7000	Non Operating
Plant	187000	225000	38000	Non Operating
Accumulated Depreciation	-35000	-53000	-18000	Operating Activity -Indirect method
	361000	433000	72000
			0
Accounts payable	65000	75000	10000	Operating Activity
Accrued Interest	5000	7000	2000	Operating Activity
Current Tax Payable	15000	18000	3000	Operating Activity
Defferred Tax	30000	37000	7000	Operating Activity
Borrowings	80000	100000	20000
Share Capital	2000	7000	5000	Discount on share
Retained Earning	64000	89000	25000

Computation of Cash receipt from customer = (Sales Revenue – Increase in Trade receivable)

= $1035000-$36000=$999000.

Paid for Supplies = (Cost of goods sold +increase inventories-increase in Accounts payable)

=$774000+$22000-$10000=$786000

Operating expenses = all expenses to running the operation.

Here we will consider Distribution cost +Administration cost =$76000+$96000=$172000

Interest expenses = Interest expense –increase of accrued interest =$7000-$2000=$5000.

Tax expenses = Tax expenses –(Increase of Current tax payable +increase of deffer tax payable )

=$24000-($3000+$7000)=$14000

Non Cash and Non operating increase = Plant increase +Equipment increase = $38000+$7000=$45000