Question

In: Accounting

Vittoria Ltd requires a Statement of Cash Flows to be prepared for the year ended 31...

Vittoria Ltd requires a Statement of Cash Flows to be prepared for the year ended

31 March 2018, the following information has been collected for this purpose.

Vittoria Ltd Balance Sheets as at 31 March

2017

2018

Cash

$176 000

$239 000

Accounts receivable

220 000

280 000

Allowance for doubtful debts

(30 000)

(40 000)

Inventory

90 000

100 000

Plant and equipment

900 000

1 074 000

Accumulated depreciation

(80 000)

(100 000)

Total assets

$1 276 000

$1 553 000

Accounts payable

80 000

70 000

Interest payable

1 000

2 000

Income tax payable

76 000

88 000

Long term loans

109 000

148 000

Share capital

400 000

500 000

Asset revaluation surplus

-

30 000

Retained earnings

610 000

715 000

Total equity and liabilities

$1 276 000

$1 553 000

Vittoria Ltd SCI for the year ended 31 March 2018:

Sales

$885 000

Less expenses:

   COGS

240 000

  Depreciation expense

90 000

   Interest expense

6 000

   Doubtful debts expense

40 000

   Salaries and wages expense

200 000

   Income tax expense

84 000

  Other expenses

120 000

Profit after tax

105 000

OCI: Revaluation gain

30 000

TCI

$135 000

Question 2 continued:

Additional information:

Vittoria Ltd classifies interest expense and dividends paid as cash outflows from financing activities.

Plant and equipment, with a fair value of $100 000, has been acquired by the issue of

$100 000 worth of fully paid Vittoria Ltd shares to the sellers of the plant and equipment.

During the year, equipment that originally cost $100 000 was sold for $30 000 cash.

Plant and equipment was revalued upwards by $30 000.

A long-term loan of $30 000 was specifically organised for the purchase of plant and equipment costing $30 000.  

Required:

(i) Prepare the general ledger accounts as required in the answer booklet.

(ii) Prepare a statement of cash flows for Vittoria Ltd, for the year ended 31 March 2018, in accordance with NZ IAS 7 Statement of Cash Flows. Vittoria Ltd uses the indirectmethod for the cash flows from operating activities (CFOA) section.  

(iii) Prepare a statement of cash flows for Vittoria Ltd, for the year ended 31 March 2018, in accordance with NZ IAS 7 Statement of Cash Flows. Vittoria Ltd uses the directmethod for the cash flows from operating activities (CFOA) section. Complete the necessary reconciliation, as required by NZ FRS-44, to be included in the notes.

(iv) Explain, by completing the table in the answer booklet, how your answers to (ii) and (iii) above would changeifVittoria Ltd classified interest expense paid as a cash outflow from operating activities.

                                                                                                                                                                            

(v) Vittoria Ltd has provided you with 15 types of cash inflows and cash outflows in the answer booklet and requires you to determine where they should be included in the Statement of Cash Flows in accordance with NZ IAS 7 Statement of Cash Flows. AssumeVittoria Ltd uses the direct method for CFOA.  Hint: Remember certain cash flows have a choice of classification; for these particular cash flows highlight the two choices available.

CFOA = cash flows from operating activities, CFIA = cash flows from investing activities and CFFA = cash flows from financing activities.                                                                                                    

Solutions

Expert Solution

FY 2017-18
Particulars Indirect Method
TCI 1,35,000.00
Add; Revaluation gain 30,000.00
Profit After Tax 1,05,000.00
Add;
Depreciation 90,000.00
Doutbful Debt expense 40,000.00
Income Tax Expense 84,000.00
Increase in Accounts Receivable -60,000.00
Increase in Inventory -10,000.00
Increase in Interest payable -1,000.00
Reduction in Accounts payable -10,000.00
Cash from Operating Activities 2,38,000.00
Long Term Loans:
For Plant & Equipment 30000
For other purpose 9000
Cash from Financing activities 39000
Purchase of Equipment -244000
Sale of Equipment 30000
Cashflow from Investing Activities -214000
Net Cash Increase during the year 63,000.00
FY 2017-18
Indirect Method
Cash from Customers 8,05,000
Cash paid to supplier -2,50,000
Employee salary -2,00,000
Other expense -1,17,000
Cash from Operations 2,38,000
Long Term Loans:
For Plant & Equipment 30,000
For other purpose 9,000
Cash from Financing activities 39,000
Purchase of Equipment -2,44,000
Sale of Equipment 30,000
Cashflow from Investing Activities -2,14,000
Net Cash Increase during the year 63,000
Cash 31.3.2017 1,76,000
Cash 31.3.2018 2,39,000
Net Cash Increase 63,000

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